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CBOE Holdings (CBOE) Hits 52-Week High, Will it Rally Ahead?


Shares of CBOE Holdings, Inc. CBOE have been on an uptrend (gaining 3.6%) since the company announced an improvement in May volumes. In fact, the share price hit a new 52-week high of $89.93 on Jun 13.

About 1.1 million shares exchanged hands in the last trading session and the stock finally closed at $89.91, gaining 0.17%. The company’s return on equity has been an impressive 24.3% when compared with the industry average of 9.5%.

CBOE Holdings has been witnessing a rise in trading volumes. Recently, the company has announced the average daily volume (ADV) for May to have rallied 23.7% year over year to 7.3 million contracts. Both options as well as future contracts exhibited an increase.

Improving trading volumes has been driving the transaction fees higher to fuel the revenue growth in turn. CBOE Holdings strong market position and global reach with powerful proprietary products, primarily SPX options, VIX options, VIX futures and strategic buyouts pave the way for continued growth.

A strong operational profile has been helping CBOE Holdings maintain a sound liquidity. The company enjoys a stable liquidity position, despite cash outlays to enhance the operating leverage and mitigate balance sheet risks.

A strong balance sheet positon has also been aiding CBOE Holdings deploy capital effectively in the shareholder-friendly moves. The company has increases dividends at a 7-year CAGR of 35.7%, besides putting a share buyback program in place.

These positives together have helped the shares of CBOE Holdings gain 10.93% quarter to date compared with the Zacks-categorized Securities and Exchange industry’s 6.98% growth.

Investors should note that CBOE Holdings has returned more than the S&P 500. Also, this Zacks Rank #1 (Strong Buy) options exchange delivered positive surprises in the last three quarters at an average of 7.2%.

The company has further seen estimates moving up for the last 60 days. The Zacks Consensus Estimate has increased 9.8% to $3.37 for 2017 and 6.4% to $3.84 for 2018.

We expect the company’s diversified product portfolio, strategic buyouts, initiatives to ramp up growth and a strong balance sheet to position it well for long-term gains and propel its shares higher.

The long-term expected earnings growth is pegged at 16.4%, better than the industry average of 12.1%.

Other Stocks to Consider

Investors interested in the finance sector can also consider MarketAxess Holdings Inc. MKTX, Total System Services Inc. TSS and Visa Inc. V.

MarketAxess is a leading multi-dealer trading platform, offering institutional investors access to global liquidity in products like U.S. high-grade corporate bonds, emerging markets and high-yield bonds, European bonds, U.S. agency bonds, credit derivatives and other fixed-income securities. The company delivered an average positive surprise of 7.26% in the last four quarters. The stock flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Total System Services provides electronic payment processing, merchant services and related services to financial and non-financial institutions in the U.S. and internationally. The company delivered an average positive surprise of 3.59% in the last four quarters. The stock carries a Zacks Rank #2 (Buy).

Visa operates retail electronic payments network worldwide. The company's average positive surprise was 7.24% for the last four quarters. The stock carries a Zacks Rank #2.

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