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Covered Call on Invesco (IVZ)

Invesco Ltd (IVZ) is an independent global investment management company. Invesco provides a range of investment strategies and vehicles to its retail, institutional and high-net-worth clients globally. It has operations in the institutional and retail segments of the investment management industry in North America, Europe and Asia-Pacific, serving clients in 150 countries. As of December 31, 2010, its distribution network has gathered assets of 61% retail, 36% institutional, and 3% Private Wealth Management clients. 32.6% of client assets under management are outside the United States, and it serves clients in more than 150 countries. On June 1, 2010, Invesco acquired Morgan Stanley’s retail asset management business, including Van Kampen Investments.

STRATEGY:
 
Look at the January 22.50 covered call. For each 100 shares of Invesco (IVZ) ) stock you buy, sell one January 22.50 covered call option for a 21.08 (23.28 – 2.20) debit or better. That’s potentially a 6.7% assigned return. This stock also pays a dividend which may add another 1.2% to the return. The stocks last ex-dividend date was 5/18/2011.

IK -> COMMENT:

 The technicals for IVZ are bearish with a weak downward trend. The stock is under accumulation with support at 21.29. S&P rates this stock 4 STARS (out of five) – buy.

S&P research notes:

 S&P maintains buy opinion on shares of Invesco Ltd. (IVZ) . Q2 adjusted EPS of $0.44, vs. $0.27, misses our $0.45 estimate. Despite our view of a difficult environment for asset gathering, IVZ achieved 4.2% sequential top-line growth through strong management and performance fees. Going forward we expect IVZ’s results to benefit from strong fund performance, a stable net revenue yield on assets under management and inflows into fixed income and money market funds. We cut our ’11 EPS estimate $0.05 to $1.72 and initiate ’12’s at $1.97. We trim our target price by $3 to $26, 14.1X our forward earnings forecast and in line with peers.