Shares of BT Investment Management Ltd (ASX: BTT) are up today following an upgrade from Bell Potter. The stockbroker now recommends BT as a buy with a target price of $14.50, implying upside of over 50% from the current trading price.
BT is one of Australia's leading investment solutions providers. According to the Financial Review, Bell Potter believe that the company's impressive full-year performance and the potential growth in the US market are what makes BT a buy today.
The company posted a record profit result in the last fiscal year thanks to an increase in funds under management and management fees.
Many of its award-winning investment funds have outperformed both the market and its peer averages, according to Lonsec Research. I believe this outperformance should help sustain strong fund inflows.
The growth of the company's funds under management has been rapid. In the last year BT grew its funds under management from $5.8 billion to $9.8 billion.
I have previously spoken about BT in a positive light, so it is pleasing to see the market taking on the same view. I've been very impressed by the performance of its United Kingdom business, and the JO Hambro Capital Management business in particular.
Its great performance means two-thirds of the company's revenue is now coming from the United Kingdom. If the Australian dollar does weaken against major currencies again, then BT stands to benefit greatly. The same would of course apply for any expansion in the United States.
Compared to its rival Magellan Financial Group Ltd (ASX: MFG), BT shares are looking good value. Currently BT is priced at 18 times earnings, whereas Magellan is priced at 22 times earnings.
According to the brokerage arm of the Commonwealth Bank of Australia (ASX: CBA), analysts are expecting both its earnings and dividend to grow by around 17% per annum through to 2018. For the current fiscal year analysts expect earnings of 56.2 cents per share and a dividend of 44.6 cents per share.
As I mentioned before, shareholders have seen an amazing average annual return of 32% in the last five years. Despite the small gains today its shares are still some distance from their 52-week high, and I believe there is every chance that this could be a sixth year of market-beating returns for its shareholders.
