Opinions
David Burrows
CME Group Inc
CME-Q
BUY
May 17, 2024
Stock price when the opinion was issued
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(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.
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.
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)
CME Group is committed to delivering new ways to manage risk and improve efficiency. Whether that means developing product solutions to empower trading strategies, expanding access to unique data insights, seamlessly connecting siloed liquidity pools, or introducing more ways to optimize the time and capital required for world-class risk management, new opportunities are always awaiting you. Social media mentions are up 1400% in the past 24h.
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.