Top Picks 2018: CME Group (CME)

01/17/2018 5:00 am EST


Timothy Lutts

Publisher, Cabot Heritage Corporation

CME Group (CME), previously known as Chicago Mercantile Exchange, is a conservative bet on the continuation of this long and strong bull market, states Timothy Lutts, editor of Cabot Stock of the Week.

The company operates four major financial exchanges (CME, CBOT, NYMEX and COMEX) where investors trade derivatives on stocks, interest rates, commodities and more.

Plus, there’s a kicker. CME now allows futures trading of Bitcoin, which means the firm will benefit no matter which way Bitcoin goes (I’m betting there’s a massive correction in the future).

Anyway, CME has delivered steady single-digit revenue growth for years while achieving double-digit earnings growth—an impressive feat.

Most recently, in the third quarter of 2017, revenues grew 6% to $891 million, while earnings grew 13% to $1.19 per share. The stock’s PE is a bit high at 31, but tht’s the price of dependability.

CME pays a 1.8% dividend. I consider the stock the top conservative investment idea for the coming year.

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