When American Eagle (AEO) launched its jeans campaign with actress Sydney Sweeney, the initial reaction was largely critical, with skeptics finding something to criticize at every opportunity. Yet, like the adage, no publicity is bad publicity, as the results speak for themselves.
The collaboration, initially labeled as “controversial”, delivered a significant uplift in American Eagle’s sales, driving the stock up more than 35% in a single trading day. What began as skepticism became a clear example of how strategic brand initiatives can translate into meaningful shareholder value.
In an increasingly discerning market, companies with strong businesses get rewarded. By leveraging our AI Agent for investing, we take it a step further by identifying quality companies that also have good stocks, and we highlight the best of those stocks in our Long Idea reports.
Our Long Idea this week features a company that benefits from strong macro tailwinds in its industry, has a low-cost advantage driven by its superior technology, and, best of all, its stock price looks cheap.
Below, we present a large excerpt from our latest Long Idea report published this week, available to Pro and Institutional members. You can buy the full report a la carte here.
We’re not giving you the ticker for this pick, but we are happy to share our hard work because we want you to see how good our research is.
This stock offers favorable Risk/Reward based on the company’s:
- strong macro tailwinds from growing markets for e-brokerage and retail investors,
- low-cost advantage driven by superior technology,
- growing revenues and profits, and
- cheap stock valuation.
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Macro Tailwinds: E-Brokerage Market is Expanding
Rising retail investor participation, enabled by accessible and low-cost trading models, has reshaped the investment landscape. Technological innovation also plays a key role: mobile-first platforms with intuitive, gamified features attract new investors, while advanced tools that automate and accelerate processes support more experienced market participants and institutions. At the same time, consumer preferences are shifting decisively toward digital platforms that are easy to use, affordable, and highly automated, which positions the market for sustained expansion.
Research and Markets forecasts the e-brokerage market will grow from $14.1 billion in 2024 to $34.6 billion in 2034, a CAGR of 9.4%.
Figure 1: E-Brokerage Market Growth Forecast: 2024 – 2034
Sources: New Constructs, LLC and company filings
Macro Tailwinds: Number of Individual Investors Continues to Rise
The Covid-19 pandemic marked a significant inflection point in retail investor activity. With increased time at home, limited alternative investment outlets, and heightened market volatility, millions of individuals turned to e-brokerage platforms as a primary means of accessing financial markets.
At the time, market analysts thought the trend might prove transitory, but evidence indicates that retail stock trading has not only persisted but continues to grow. The accessibility of low-cost trading platforms, the democratization of financial information through digital channels, and a generational shift toward active investing have all contributed to sustained growth.
So far in 2025, retail investors account for approximately 21% of daily trading volume on the Nasdaq, compared to just 10% in 2020.
This trend serves as one of the primary tailwinds behind the expansion of the e-brokerage market.
Looking ahead, demographic factors further support an upward trajectory. Younger cohorts, particularly millennials and Gen Z, are entering their peak income and savings years with a stronger predisposition toward direct market engagement and are more technologically savvy than previous generations.
The growing interest of younger generations in capital markets is likely to benefit retail-focused, entry-level investment platforms, such as Robinhood (HOOD) and Webull (BULL), given their emphasis on simplicity and accessibility. However, as these investors gain experience and develop a deeper understanding of market strategies, their preferences are likely to shift toward platforms that provide more advanced tools and sophisticated capabilities, such as this company’s platform.
Consistently Growing Profits
While growing customer accounts, volumes, and assets, this company has also grown its top- and bottom-line. The company has grown revenue and net operating profit after-tax (NOPAT) by 23% and 22% compounded annually since 2014. See Figure 2.
The company’s NOPAT margin fell slightly from 42% in 2014 to 39% in the TTM, while its invested capital turns rose from 0.2 to 0.6 over the same time. Rising invested capital turns drive the company’s return on invested capital (ROIC) from 9% in 2014 to 23% in the TTM.
Additionally, the company’s Core Earnings, a cleaner version of earnings, grew from $45 million in 2014 to $838 million in the TTM, or 32% compounded annually.
Figure 2: Revenue and NOPAT Since 2014
Sources: New Constructs, LLC and company filings
…there’s much more in the full report. You can buy the report a la carte here.
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