It's been a wild ride for E*TRADE
Shares of the online broker have been volatile little suckers as investors ponder its potential as a turnaround and buyout candidate.
This week finds the discounter beefing up its finances, raising $147 million in a stock sale. Dolling itself up isn't easy when investors still see the banking demons that had the company against the ropes.
However, it is E*TRADE's growing brokerage accounts business that is leading many to speculate that rivals Charles Schwab
BMO Capital Markets analyst Michael Vinciquerra doesn't see it that way, at least not now. He feels that potential buyers will want to see the company's credit outlook improve before making a move.
"Buying on a takeover possibility might be a good idea 10-12 months from now, but we think it's foolhardy in the near term," he writes in an analyst note.
That's the rub, though.
The moment that E*TRADE has successfully conquered its mortgage-related shortcomings is also the same time that the broker will feel perfectly fine growing on its own.
Its discount brokerage business continues to grow, and the E*TRADE Baby is a more memorable marketing icon than anything that its rivals have cooked up.
Schwab and TD AMERITRADE also need to be careful. They're not the only ones in this blinking contest. Knight Capital
E*TRADE may not be a clean buyout magnet for a few more quarters, but all it takes is one impatient nibbler to make a deal happen sooner rather than later.
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Longtime Fool contributor Rick Munarriz believes in self-service gasoline pumps and self-service stock brokerages. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.