As global stock markets continue to rally to new highs, one sector that is positioned to benefit significantly is financial services. Consider for a moment that the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has increased by 21% in the past 12 months; for firms that charge a management fee based on funds under management (FUM) even if they have been standing still, it's likely that their FUM has increased significantly, which in turn means their fee revenue is up as well.
Four companies that stand to benefit from the improved market conditions and based on research provided by Morningstar are forecast to increase their earnings per share (EPS) by over 20% each in the coming financial year are:
1. BT Investment Management (ASX: BTT), the Westpac (ASX: WBC)-aligned funds management firm, is forecast to increase its EPS from 16.5 cents per share (cps) for the financial year (FY) 2013 to 22.8 cps in FY 2014. This implies that a 38.2% increase in EPS is expected.
2. Macquarie Group (ASX: MQG) is forecast to increase EPS from 246.1 cps to 308.3 cps in FY 2014, which represents an increase of 25.3%.
3. Perpetual (ASX: PPT) is forecast to increase EPS from 183.7 cps to 231.5 cps in FY 2014, which represents an increase of 26%.
4. Platinum Asset Management (ASX: PTM) is forecast to increase EPS from 22.6 cps to 27.6 cps in FY 2014, which represents an increase of 22.1%.
Foolish takeaway
Of course just because a company is expected to grow earnings at a fast rate, that doesn't mean investors should disregard what they pay. Switching off from the 'noise' of the stock market and only paying a price below an investor's conservative determination of intrinsic value arguably becomes even more important as the stock market scales new highs.
