ETrade Financial Corp. (ETFC-Q)

(A Top Pick October 10/17 Up 19%) As interest rates went up, they made great returns on holding investor deposits. For every 1% increase in Central Bank rates, lead to a 9% increase in their earnings. Deposits have now become very competitive once again, which will now lead to a reduction in margins he thinks. He stepped out in the summer.

(Past Top Pick, August 16, 2017, Up 38%) Sold at a good profit. It's well-run. He likes this space, online trading. Expects trading volumes online to increase. This space has consolidated in the past few months. It could be taken out by someone like a Schwab.

A questioner noted that the stock had dropped a lot but was now rising on a rumour of a possible buyout. Murray responded that he doesn’t know the company well enough to recommend buying, holding or selling. He noted that discount brokerage market in the US has become very competitive with heavy advertising of low prices, low fees and of interest rates on cash reserves. Their incomes are being squeezed. E*Trade is a good long-term business. As more people retire, they will manage their investments as a hobby. So he would not be afraid of this stock, but he doesn’t know whether the stock is overpriced at this level. If the PE is 15-20x, he thinks it is OK. (Analyst's price target 17.74.)

(A Top Pick August 9, 2017. Up 50%). He thinks this has largely played out. There is now a lot more competition, including head-to-head price competition with Fidelity. Fee compression is unrelenting, putting pressure on the whole industry. The rise in interest rates should help companies like E*Trade because they can earn money from the customer’s cash. However, last quarter, they disappointed, showing decelerating growth. Their growth is still significant, but not as much as it has been. The stock trades at a discount to Schwab and to TD Ameritrade and the main reason to own them at this point is the expectation that if they don’t do better, they’ll sell the company. He stepped away because that’s now what he would hold this company for. Someone who wants to speculate on a takeover could reasonably buy the company now, but he would not.

If the market is still bullish and this business benefits from more transactions and rising rates on investor holdings, this will be a winner. (Analysts’ price target is $69.88)

(A Top Pick July 7/17 Up 58%). He thinks now is the time to take profit, because they have benefitted from rising interest rates on investor cash holdings. He now thinks interest rates will start to plateau, so much of the gain has been already made. He would not encourage fresh buying at this time. This could become a take-out target as it trades at a discount to others in the space.

The chart looks great, moving straight up for more than a year. He's like to see more volume. Buy it.

(A Top Pick July 7/17 Up 68%) They will see good returns as interest rates rise, due to large customer cash holdings. If Fed funds go up 25 bps, their earnings increase 9%. They will likely be purchased, but still trades at a 20% discount to Schwab.

Every time the Fed raises rates by 25 basis points, it's 9% accretive to their balance sheet. He's been long on this and continues to love it. (Analysts' target of $63.33)

(A Top Pick Feb 8/17, Up 44%) It has good interest rate torque. They get 9% more earnings from every 25 basis points in interest rate hikes. Volumes are nice. The real story is a really rational management. There could be a deal with Ameritrade which would be good for investors.