US capital markets have seen wild interest rate changes, stock market performance, and economic fluctuations over the past 3 years. So has Tradestation Group Inc. TRAD got crushed over the same period, trading as high as $13 per share. Compare that to todays $7 per share.
Tradestation Group Inc (TRAD) strengths can be seen in multiple areas, such as its largely solid financial position with no debt, good cash flow from operations and reasonable overall valuation levels.
Net operating cash flow has significantly increased by 115.98% to $6.94 million when compared to the same
quarter last year. In addition, TRADESTATION GROUP INC has also vastly surpassed the industry average
cash flow growth rate of -137.02%.
Investor confidence has been crushed by recent disruptions in the capital and credit markets, stemming from a declining US dollar, a bad housing market and wild spending by the FED. The capital markets industry has seen historic brokerage firm bankruptcy filings, bank failures and a jobless and weak economic recovery.
Things are Changing, Obama is Becoming Pro Business
Since the November election Obama has move to the right. Obama has brought CEO for meetings in the white house. He had not done that during his first two years as president. The war between Obama and the US Chamber of Commerce is over. And Obama extended the Bush Tax cuts, which I am sure is making the gipper smile.
Obama was even acting like Reagan during his State of the Union address. As President Obama stood before the congress he spoke of freezing spending and federal salaries. He spoke of simplifying the tax code and cutting defense spending. (Source: Obama has a Crush on Reagan)
Retail Investors Are Missing the Boat
Since November, the stock market has been on a tear and as a result. retail investors have been slowly returning too. Recently Charles Schwab surveyed its customers regarding its trading platform. I think they know their trading platfor sucks. Full Disclosure: I am a Schwab Customer and I own TRAD. I thought, what trading platform? I hardly use that pos interface, I only use Schwab to place trades in a few small accounts and have been moving accounts away from Schwab because if its horrible website.
The Bulk of my investment management dollars are on a real trading platform. A Platform rich with tools. I trade ten times more on non-Schwab accounts because I can stay connected all day, easily without the site logging me out. When the retail investor comes back to trade, TRAD could go back to historic levels
Stocks since November are doing much better, including TRAD.
Schwab is Missing the Boat?
If Schwab is interested in the Small Investor who likes to trade often, then Schwab needs to improve trading on it’s site. Maybe there isn’t enough money there, but the potential is definately there. Schwab could catch a boat if they bought a real trading platform like Tradestation.
I own TRAD for it’s potential when the retail investor returns. And for its takeover potential from Schwab.
About Brokerage Sub-Industry
The brokerage sub-industry is concentrated and characterized by consolidation activity. Hefty returns over the past decade have encouraged investors to actively trade, which in turn, drives demand for brokerage activities and consulting services.
There are about 10,000 US firms, with $15 billion in the brokerage sub-industry. , provide financial planning and advisory services. This sub-industry is driven by consumer income and population growth. Approximately 60% of total revenue is generated from individual investors. (Sources: The Street, Ford Research and S & P)