The Small Niche Sector That Every Investor Should Be Exposed to
By Bryan Bottarelli
“The Most Powerful Investment You Can Make Today”
One of the most powerful investing trends in recent months is the popularity of publicly traded exchanges -- and it all started with Chicago Mercantile Exchange Holdings (CME:NYSE).
CME went public on December 24, 2002 at $43.60 per share. Today it trades for $557 per share, good for an incredible 1,177% increase. The remarkable success of the Chicago Mercantile Exchange Holdings has given birth to a whole new niche sector of exchanges that offer their shares on the open market -- and today’s Sector Alert will recommend the best publicly traded opportunities for you to invest in today.
It’s not hard to figure out why these stocks offer such tremendous upside potential.
First off, the barriers to entry are insurmountable. For example, there are only a handful of publicly traded exchanges in existence -- which means you have a lot of investment dollars flowing into a very small pool of stocks. This supply/demand imbalance will fuel continued upside momentum across the board.
Secondly, exchanges make money in times of heightened volatility. No matter if the markets are up or down, increased levels of volatility equates to increased trading volumes -- which means more commissions for the exchanges. For an investor, any company that’s positioned to grow revenues in any market condition is an incredibly sought-after asset -- which is exactly what you have with today’s exchange plays.
Third, the publicly traded exchanges are all experiencing their own little M&A boom -- which simply pushes the entire sector higher. Daily rumors of buyouts, synergies and takeovers are happening more and more frequently within this small niche group -- and this drives prices even higher. In fact, the mere speculation (or rumors of “talks”) pushes the entire sector aggressively higher -- painting a very bullish picture for the whole group.
How should you play it? I’m absolutely bullish on the following three companies:
NASDAQ Stock Market (NDAQ:NASDAQ)
NYSE Group (NYX:NYSE)
InterContinental Exchange (ICE:NYSE)
It’s quite clear that NDAQ will soon acquire another exchange -- which means it’s only a matter of time before the stock breaks out of its recent trading range and moves aggressively higher. The stock popped just last week on news that NDAQ made a preliminary takeover bid for the OMX (which operates stock exchanges in Copenhagen, Stockholm, Helsinki and Iceland) valued at $3.3 billion.
News is also leaking that the Nasdaq stock market is also in talks to buy the Philadelphia Stock Exchange -- which would give NDAQ a foothold in the growing options business (Philly facilitates the order flow of the third most-options contracts traded nationally). So once again, NDAQ will, in one way or another, make some move soon and I want everyone to be positioned to ride the coming upside.
On the same hand, you also want to have upside exposure to the NYSE Group (NYX:NYSE) and the InterContinental Exchange (ICE:NYSE).
NYX is the owner and operator of the New York Stock Exchange, and ICE is an Internet-based futures exchange, trading contracts in oil and energy (among other things). Oil is constantly a ticker that you see on CBS.MarketWatch.com, and trading of oil and natural gas is becoming increasingly popular, even for the individual investor. ICE is the one exchange that facilitates that trading.
As trading volumes continue to grow year over year, I consider the publicly traded exchanges the most powerful “buy and hold” investment you can possibly make today.
If you do not own exposure in this powerful market sector, I recommend buying one, two, or all three of the stock recommendations listed above. Over the next few years, you’ll be very glad you did!
Bryan Bottarelli
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*Editor’s Note: Bryan is an active trader of all three stocks profiled in today’s Sector Alert in his elite new trading service called Bottarelli Research. To learn more about Bottarelli Research, take a look at Bryan’s special letter by clicking the link below:
http://www.bottarelliresearch.com/promo/?DA65880A24
*Video Note: Bryan also just filmed a special “Smart Trading Action Alert” segment for Taipan Financial News covering this same topic. If you have yet to watch this video, take three minutes and view it below:
http://www.taipanfinancialnews.com/video.php?channelID=9&showID=153
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