Mark Skousen, Forecasts & Strategies
Based in the financial epicenter of the world, Dr. Mark Skousen is a renowned economist, financial advisor, lecturer, university professor and author of more than 20 books, including several financial bestsellers. Since 1980, Dr. Skousen has been providing investors with the best investment ideas to profit in the pages of his award-winning monthly newsletter, Forecasts & Strategies. He is also the editor of three highly profitable weekly trading services: Skousen Hedge Fund Trader, Skousen High-Income Alert and Skousen Turnaround Trader that have delivered profits of 294%, 138% and 101%.
E-Trade Financial (NASDAQ: ETFC)
My stock recommendation of 2008 is a stock that I expect to be one of the biggest turnaround stories of 2008, ETrade Financial (NASDAQ: ETFC).
In late 2007, rumors started circulating that E-Trade Financial, one of the world’s largest online brokerage firms, was heading toward bankruptcy after getting in over its head in mortgage-related securities whose values had plunged with the decline of housing prices and rising defaults. Over 70,000 clients left, the CEO resigned, and the stock fell more than 80% from its high of $25 a share.
Since then, things have been looking up. The Hedge Fund Citadel, run by highly respected Ken Griffin, injected $2.55 billion by buying a big segment of E-Trade’s distressed debt portfolio at a steep discount. Customers started coming back, especially with E-Trade’s advertised 4.4% yields on its money fund, 100 free trades for new customers, and its popular Super Bowl ads. And E-Trade has a lot going for it. It has more than 3.7 million customer accounts, healthy operating margins, more than $176 billion in customer assets, and has won recognition for service, reliability, and security.
The biggest factor in its favor as a turnaround is the consistent purchase of stock by company insiders. Recently, company officers purchased $2 million of E-Trade shares. Ten E-Trade insiders, including its Chairman and its acting Chief Executive, bought 474,761 shares of the company. For seven of the insiders, these were their first reported open-market purchases. And in January, the New Yorkbased online broker also said daily average trades rose 22% from a year ago. “We view January’s performance as evidence that our turnaround plan is gaining traction and we’re building momentum on all fronts,” reported the company in a press release. E-Trade also added 16,000 net new retail accounts in January, gaining more than 500 net accounts daily during the month.
The greatest turnaround story of 2008 is likely to be in E-Trade Financial and their recovery is already underway. According to my predictions, this stock could easily double within the year.
Yours faithfully in freedom & prosperity, AEIOU,
Mark Skousen, Ph.D.
Editor, Forecasts & Strategies
www.MarkSkousen.com