Banking, finance, and taxes

Deutsche Bank Likes Exchanges and Online Brokers Into Upcoming Earnings

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A continuing run of a bull market helps lots of companies that are in the business of trading stocks, bonds, derivatives and exchange traded funds. With a solid quarter in the books for many of the top companies in the sector, it’s a good bet that some of them will post some great third-quarter results. The exchanges and the online brokers traded down over the past month and may be offering investors a very good entry point in front of the results.

Deutsche Bank favors the exchanges and e-brokers as solid stocks to pick up before earnings, and the firm noted this in a report:

Overall, we tactically favor the e-brokers into the third quarter earnings (best Consensus beats), followed by the exchanges (concerns about market data appear overblown), then the traditional asset managers (possible M&A talks), and lastly the alternative asset managers and trust banks.

Deutsche Bank has two online brokers and two exchanges rated Buy, and all four make good sense for growth accounts looking to add financial plays.

Cboe

This company is the beneficiary of volatility and options trading. Cboe Global Markets Inc. (NASDAQ: CBOE) was founded in 1973 as the first U.S. options exchange and went public in 2010. Its primary business is trading listed options contracts on equities, indexes (including several exclusively licensed and proprietary products) and ETFs through a hybrid model that combines electronic and open outcry trading.

Cboe Global Markets also offers listed options on C2 and futures and options on futures products on CFE. The company has grown primarily through organic means over the years.

Investors receive a 0.92% dividend. Deutsche Bank has a $120 price target and the consensus target was last seen at $109.42. Shares traded at $97.85 Friday morning.

CME

This stock has had a solid 2018 and is a top pick at Deutsche Bank. CME Group Inc. (NASDAQ: CME) exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options. CME brings buyers and sellers together through its Globex electronic trading platform and its trading facilities in New York and Chicago.

The company also operates CME clearing, one of the world’s leading central counterparty clearing providers, which offers clearing and settlement services across asset classes for exchange traded contracts and over-the-counter derivatives transactions.

The company’s non-U.S. business is growing, and with West Texas Intermediate crude increasing relevance as a global benchmark, it is another positive for the trading giant.

CME investors are paid a 1.65% dividend. The Deutsche Bank price target for the stock is $185, and the posted consensus target is $182.36. Shares traded early Friday at $171.55.

E* Trade

This is a top discount brokerage firm, and it could be offering investors a solid entry point here. E*Trade Financial Corp. (NASDAQ: ETFC) is a financial services firm that offers competitively priced brokerage, investing and banking solutions to individuals. The firm has expanded its brokerage and trading offering to banking products, via E*Trade Bank, and investing products and solutions.

E*Trade offers its services online, at branches and through its network of representatives, investment professionals and advisors. The firm has grown organically and via acquisitions throughout its history. The rising market could be a huge boon for the company, and the company’s consistent ad campaigns have helped to drive new customers.

The $63 Deutsche Bank price target is less than the $68.57 consensus target. The shares were trading at $52.65.

TD Ameritrade

This is one of the leading e-brokers, as well as a top pick at Deutsche Bank. TD Ameritrade Holding Corp. (NYSE: AMTD) is a leading online brokerage and financial service firm that offers clients trading, investment and advice solutions.

The firm was founded in 1975 to provide investors with a cost-efficient or discount and online brokerage offering, which has driven its success. Online trading expanded to cash management, which has expanded to branches (100+), investment products and its registered investment advisor offering.

The Deutsche Bank analysts are bullish on the possibility of strong retail trading volume, and this is the premier pick in the industry. Despite the strong competition in the discount arena, the company has outstanding growth possibilities.

Shareholders are paid a 1.43% dividend. Deutsche Bank has set its price objective at $72. The consensus target price is $67.96, and the stock traded at $53.35.

These four companies could be poised to post solid third-quarter results and may be offering investors looking for a short-term pop some good ideas. Needless to say, these are outstanding long-term plays as all are sector leaders.

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