Michael Sanderson is a director in equity research at Barclays, and interested in financial stocks – and two stocks in particular have caught his expert eye.
We will take a close look at two promising stocks – TP ICAP (GB:TCAP) and Provident Financial (GB:PFG) – which Sanderson has rated in recent months.
Prior to joining Barclays in 2019, Sanderson worked in equity research with Société Générale, Evolution Securities, and Dresdner Kleinwort Wasserstein.
Sanderson is mainly interested in financial stocks in the UK, the U.S. and, German markets.
As per the TipRanks star rating system, Sanderson is a four-star rated analyst with a success rate of 59%, with 83 out of 141 profitable transactions. He is ranked 1,924 out of 8,047 analysts on TipRanks.
The TipRanks Expert Centre covers such advice from a long list of analysts rating stocks from different industries.
He has an average return of 5.8% per rating. However, his best rating so far is Intermediate Capital (GB:ICP) which earned an 86.5% return between April 2020 and April 2021.
Let’s discuss the two stocks in detail.
What is TP ICAP?
TP ICAP is a UK-based financial services company dealing in brokerage services, data and analytics solutions, advisory services, and more.
The company’s stock has gained almost 9% in the last five days, post its announcement of interim results. Overall, share prices are down by around 33% in the last three years.
However, the company has increased its dividends by 13% to 4.5p per share in its results.
Talking about results, the company delivered £72 million in profit after tax, up from £28 million last year. Revenue grew by 15% to £1.08 billion. The company is also on track to hit £25 million in cost savings by the end of this year, which will further boost profitability.
TP ICAP has and will further benefit from volatility in the market because of the inflationary situation. The company has a positive outlook on rates, which will impact its profitability in the future.
View from the City
According to TipRanks’ analyst rating consensus, TP ICAP stock is a Strong Buy. The company has three Buy ratings.
The average price target is 273.3p, with a high forecast of 400p and a low forecast of 210p. The target price shows a change of around 76% from the current price level.
Sanderson is highly bullish on the stock and has a price target of 400p, with an upside potential of 162%. He has a 67% success rate on this stock.
Provident Financial – Moving to less risky customers
Provident Financial provides financial services such as credit cards, loans, and vehicle financing to underserved markets.
The company’s latest announcement of its interim results for 2022 was in line with expectations and demonstrated the company’s good financial position.
PFG’s profits were slightly down at £54.3 million from £63.5 million last year. The new acquisition growth was hit by higher central costs. To overcome that, the company is now focusing more on near-prime customers for credit cards in an effort to reduce its overall costs.
The company has also announced an interim dividend of 5.0p per share, as compared to no dividends in the first half of 2021.
Provident Financial’s stock has not generated a good return for its shareholders in the last five years. However, the numbers look good and the company’s strategy to shift to less risky customers will help in delivering better profits.
View from the City
According to TipRanks’ analyst rating consensus, Provident Financial stock is a Moderate Buy. The company has two Buy ratings.
The average price target is 370p, with a high and a low forecast of 370p. The target prices imply upside potential of 95.7% from the current price level.
Conclusion
These companies have their future revenues and profits sorted, which puts them on the radar – and don’t forget the attractive dividends.
