Nervous stock markets have hammered the share price of many UK-listed financial services companies during the past 12 months, whose price movements are often highly correlated to their underlying market. Yet shares in CMC Markets (CMCX) have risen by a fifth since the company's flotation on the London market in February, which provided enough momentum to push the stock into the FTSE 250 index in June's quarterly review. As a provider of spread betting, contracts for difference (CFDs) and foreign-exchange trading, CMC has capitalised on investors' desire to hedge their exposure - and make money from - market swings. With such fluctuations showing no signs of abating post-referendum and the group pushing into the institutional market, we reckon there is every reason to believe CMC's solid profits growth will continue.
- Active client numbers growing
- Geographically diversified
- Widening profit margins
- Shares rated below chief rival
- Sales per client pressurised
- Margins lag chief rival
CMC may not be as big a household name as its closest competitor, IG Group (IGG), but its clients trade in around 10,000 financial instruments in more than 70 countries. The bulk of CMC's business comes from trading in spread betting and CFDs, its platform allowing its predominately retail client base to deal in shares, indices, foreign currencies and commodities.