Envestnet (Ticker: ENV) is an American company, with headquarters in Chicago, founded in 1999 by Jud Bergman, current CEO, and Bill Crager, the current president.

NYSE quotation dates back to July 2010, when the first negotiations started at $9 per share.

ENVESTNET: the reason why I’m optimistic

I always hunt for new stocks to analyse and trade, sometimes to speculate and sometimes to invest on a wider time frame.

Today I’m going to describe a very interesting stock, Envestnet, whose singular features caught my attention and make its shares suitable for investments.

Envestnet supplies software for financial promoters and institutions with a huge number of users. I’m talking about $10 billion on a total of 300.000 consultants. But the good news is another: the company nowadays reaches only 18% of market and this implies optimal margins of growth.

The objective pursued by this American company is the creation of an all-in-one software for patrimony management which can cover a wide range of functionalities: from financial planning, to trading, from portfolio balance to return analysis, and even private portals for customers and a series of other facilities.

Plus, after the acquisition of another American company, Yodlee, Envestnet gained a favourable position against competitors, by increasing its value and the quality of service.

 

Fundamental Analysis

If we consider the fundamental analysis in details, we will find some interesting points. Envestnet has a PEG (relation between P/E and growth rate) of 1,75, which is very positive considering a P/E of 24,83, below the average of sector 25.86.

Furthermore, also the recent UBS Buy rating with target at $44 increases the interest on this stock.

Personally, I don’t trust bank rating much, however it is another element to get a clearer vision of the company.

 

Technical Analysis

Now, let’s take into account the most practical aspect, the technical analysis.

After NYSE quotation in 2010, this stock has continued to rise until it touched its high in area $57 in Spring 2015, when two important events determined a fall to current area $34.30:

  1. earnings in May 2015 didn’t reflect market’s expectations and the stock was penalized losing nearly a 20% in a very few days.
  2. In August of the same year, the acquisition of Yodlee lead to a decrease of 30% in a day. The reaction of market operators was extreme, they thought that Envestnet would have spent too much to buy the Californian company. On the contrary, the investment was a brilliant strategic decision, because it contributed to improve and differentiate Envestnet’s software, increasing users and potential customers.

 

envestnet

 

Having great opportunities to grow and being a “small cap” – capitalization lower than $1,5 billion −, this stock won’t be involved in market makers’ speculation.

 

How can we make a profit?

Buying this stock at current price gives us the opportunity to set a long term investment without settle a huge quote of capital. The company is efficient and has good margins of growth in an expanding sector.

On the opposite, from a more speculative point of view, we can think of buying CALL options with expiry November 2016 or February 2017, strike close to the first target in area $43-44.

 

 

The analyses and strategies described are for informational purposes only and should not be considered as investment advice or an indication to the purchase and / or sale of any financial product . Any information provided should not be considered as a reliable indicator of future results and the decision to operate on the basis of these suggestions it is at the sole discretion of the reader .