BUYING SHARES OF NYX FOR RETIREMENT ACCOUNTS
It is fair to say that shares of NYX (NYSE Euronext) will be sensitive to bull and bear cycles. It is a company that derives its revenues from the trading and access to various types of securities on a daily basis. In fact, between all the exchanges NYX owns globally, roughly one-third of all global equity trades are made through one of their exchanges. It is the largest such entity in the world.
It popped up on my radar screen as a result of the tremendous amount of insider buying taking place in the company recently. Most impressive is the seven figure buy that took place by the Deputy Chairman of the company earlier this week.
The per share price has declined significantly since last year when a merger was announced with Deutsche Boerse. That merger has since been dumped by European regulators and is no longer in the picture.
While the shares have recovered from their 2011 lows of roughly $22 per share, they are nowhere near their $41 high of 2011 and a long ways from the all-time of $112 made in 2006.
The future share appreciation in this company comes down to market environment...plain and simple. It is essentially a play on whether the global markets will be accommodating towards investors or hostile. An accommodating market sees increased volumes, participation and opportunities that will be reflected in the share price of NYX. A hostile market will, obviously, hurt the prospects of a company that deals directly with equity trading more than most other entities.
In the meantime, the company is extremely shareholder friendly. It has a 4% yield, which always helps with the process of waiting around for a company to experience capital gains. They have been in the process of buying back shares for sometime now and recently announced another $550 million to be allocated towards share buybacks.
Here is a technical look at the company:
click chart to enlarge
NYX
On a fundamental basis, all valuation measures point to opportunity. It trades at one times book value and 10 times forward earnings. They also sport some extremely fat margins that should remain consistent over the long-term. All of this is for a global leader in its respective sector, keep in mind.
NYX is a long-term buy with a time horizon of 5 years plus at a minimum. I am purchasing it for retirement and conservative accounts only. Let it sit and forget type security.
