Monday, May 21, 2007

Stock of the Day

My Stock of the Day is NYSE Euronext (NYX).

The stock has been mired in a downtrend since peaking at 112 right before Thanksgiving. The stock had just enjoyed a nice run from 75, and was due for a rest. But since then, it has made a series of lower highs and lower lows, recently testing the 80 support level.

The stock vaulted +5% higher today, on little news. There was some recommendations made on, but no big analyst upgrades or anything.

At 25x next year's earnings, I don't think the stock is expensive given its unprecented global brand and reach. The frenzy amongst exchange stocks makes it likely that NYX can not only maintain, but possibly expand its multiple. And it is entirely plausible that earnings estimates for next year prove too conservative once all of the cost cutting and merger synergies have time to come to fruition.

The stock still has some work to do, but today's volume surge is a good sign that there is more upside ahead. The stock broke above its overhead 200-day today, and I think it will also penetrate its overhead 50-day in the near future.

long NYX


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