The CME group, owner of the Chicago Mercantile Exchange, can be a great bet. As an investor, you could look to buy CME Group stock to lock in gains in commodity.
When you are looking to buy value based stocks, one key problem could be how do you decide on a stock? One easy solution would be to go by brokerage reports. But there are hundreds of reports on an equally large array of stocks. To decide on any one of them is not just an uphill task but rather tricky also. One great way to search for right value would be to zero in on
- Forward-looking sectors
- Stocks with valuations that have significant room for growth
- Relative underperformers with strong business fundamentals
- Stocks with robust dividend payout scheme
Reasons to Buy CME Group Stock
The CME Group doesn’t just own the Chicago Mercantile Exchange but a host of many other trading platforms. A multitude of speculative options is traded here from S&P Futures to oranges and pork bellies. The company has been continually expanding their operations and the ambit of their reach.
If you are looking for long-term value, this is the kind of stock that can help you cash in on both the trend and value simultaneously. Being a nerve centre of speculative trading, the movement in CME stock also signals market direction. So, given the bull run that’s expected in many commodity counters going forward, you could buy CME Group stock to lock in gains in commodity.
The CME Group comprises of 4 main exchanges:
Together these offer one of the widest arrays of globally benchmarked assets in the world of commodities. As investors, this diversity and depth can often help you better arbitrage against risks in other asset classes. These commodities help you tackle global uncertainties in a more constructive manner.
Together these exchanges handle close to 3 billion contracts annually, and their aggregate worth is nothing less than $1 quadrillion. What works for an investor is CME is not just a hub of commodity trade globally, you also get to experience the broad diversity that comes with it from basic futures and derivatives to even interest rate based options and even weather and real estate plays.
They are the leading clearing providers in the world and serve as a counterparty to almost every trade. The company does not just eliminate third party credit risk for traders, but as an investor in CME, your risks also get minimized to a large extent. So, you could comfortably look to buy CME Group stock to lock in gains in commodity.
The Big Value Call
Any decision related to the final stock buy is also deeply dependent on the overall valuations. This is the avenue that provides investors with really good news if you plan to buy CME Group stock to lock in gains in commodity.
- The CME shares have spiked close to 2% in 3 months flat
- Year to date gains are close to 16%
- The stock’s already 6% above its 200-day moving average
- The technical trends indicate a significantly large breakout going forward
The strong business fundamentals have propelled a strong earnings estimate. A poll of 20 brokerages indicates that earnings for this fiscal may hover around $4.42 per share. Going forward investors can brace for even more handsome gains. The earnings estimate for the next financial year is close to $5 per share.
The overall volatility in world asset classes has resulted in more investors opting for the liquid assets on CME. Needless to mention this has undoubtedly boosted business prospects and the stock’s performance as well. As an investor who plans to buy CME Group stock to lock in gains in commodity, this also acts as your insurance to hedge against market uncertainties.
More Earnings For Investors
As an investor when you are zeroing in on a stock, the extent of dividend payout also becomes an important consideration. This is the element that ensures a regular fund inflow, and you can often recover a good part of your investment through it. CME at the moment
- Has a regular dividend payout close to 60 cents a share
- The company is also considering a special dividend payout during the year-end
- According to some estimates, the total payout could be close to $6 a share
- Estimates project a massive 5.1% yield for the stock.
Overall, therefore, investors can safely bet on a growing story with ample room for a future upswing.
- One key reason that CME is the toast of the hour is also that of the kind of gains that we expect from the commodity market. The overall supply- demand matrix indicate an upswing going forward on the back of
- Higher global inventories
- Movement in the currency market
- Impact of currency on agri-commodities especially
- Recovery in energy prices likely
- Interest in Commodity Index Funds, the favorite hedge against inflation
Additionally, if you want to buy CME Group stock to lock in gains in commodity, the open interest position in agri-commodities indicate that there is ample room for growth going forward.
The commodity market globally is going through an upswing given the volatility in other traditional investment destinations like stocks and currency futures. This is one of those plays that help you hedge against inflation as well as stock market uncertainties in one single go.
In short, if you plan to buy CME Group stock to lock in gains in commodity, you can perhaps bet on the most convincing and reliable commodity market stories. The robust earnings estimates, the strong dividend payout and the projected bull run in commodities can only go to enhance overall gains.