Intercontinental Exchange Inc. (ICE) is a vertically integrated operator of financial exchanges and provides ancillary data products. Though the company is probably best known for its ownership of the New York Stock Exchange, ICE operates a large derivatives exchange, too.
The company is well-positioned for growth due to the accelerated digitization taking place in the U.S. residential mortgage industry. ICE already has the largest mortgage network in the country, but the integration of Ellie Mae into ICE Mortgage Technology should help boost its mortgage business.
ICE has enough liquidity to handle short-term obligations as it has a current ratio of 1.0. The company is also highly profitable with a net margin of 32.3%. In the latest report quarter, revenues jumped 22.1% year over year leading to a Growth Grade of B in our POWR Ratings system.
The stock appears a little overvalued with a trailing P/E of 24.23. ICE’s stock was showing bullish momentum at the end of last year, but performance has been mixed ever since, as shown in the chart below.
Take a look at the 1-year chart of ICE below with added notations:
After a steady rally up to its April peak, ICE has struggled to get past the $122 resistance (red). That level is also preventing the stock from hitting new 52-week highs. ICE seems to be on its way back up to that $122 mark again, and a breakthrough could lead to another leg higher for the stock.
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The ideal long position on the stock would be on a breakout above the $122 resistance level, with a protective stop placed below the entry point.
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ICE shares were unchanged in premarket trading Tuesday. Year-to-date, ICE has gained 5.67%, versus a 21.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing.
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