Brendan Caldwell CME Group Inc CME-Q PAST TOP PICK Mar 01, 2023

Shares are too cheap vs. its growth rate.

(A Top Pick Mar 30/22, Down 27%) 800-pound gorilla in the derivatives space. Bet heavily on crypto. In technology, he tries to buy the picks and shovels providers. So, companies that will do well agnostic of which technology ends up triumphing. CME may be down, but it's not going out of business.

They benefit from higher interest rates.

We could see a pick up in volatility or hedging, which would benefit CME.

One of the largest exchanges in the world. Good for long term investors as has steady income streams. Futures and derivatives products very profitable (exclusive ownership of futures). Growth in international market and data of users (electronic gold). High barrier to entry also makes for a good business. 

25% of firm assets in financial sector. Capital markets in a good spot. Good company to get exposure. Valuation of shares appear to be high, but would recommend buying. 

He bought more when shares plunged after the vote. Market trading volume is up 18% YOY. Also, this is a dividend play and they buyback shares. The past 3 Decembers, they announced a special divided, which he thinks could be $6 this year.

He chose to own this instead of owning gold, silver, or other commodities. You get double the return, with 1/3 the risk. Gets paid on both sides of deals. Capex is very low, so they pay a special dividend at the end of the year on top of their growing dividend. 

Not just commodities. Also interest rates, currencies, and anything that can be traded. After January 20, volatility in the market is expected, which means more buying and selling of options and futures. Yield is 2%.

(Analysts’ price target is $245.42)