Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online options-trading brokerage optionsXpress Holdings (Nasdaq: OXPS ) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at optionsXpress' business and see what CAPS investors are saying about the stock right now.
optionsXpress facts
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Headquarters (Founded)
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Chicago (2000)
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Market Cap
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$849 million
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Industry
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Investment brokerage
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Trailing-12-Month Revenue
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$244.94 million
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Management
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CEO David Fisher (since 2007)
CFO Adam DeWitt (since 2007)
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Return on Equity (Average, Past 3 Years)
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29.6%
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Cash/Debt
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$1.07 billion / $0
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Competitors
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E*TRADE Financial (Nasdaq: ETFC )
TD Ameritrade (Nasdaq: AMTD )
Charles Schwab (NYSE: SCHW )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 97% of the 1,185 members who have rated optionsXpress believe the stock will outperform the S&P 500 going forward. These bulls include TMFMrquakeroats and tekennedy.
Two weeks ago, TMFMrquakeroats tapped optionsXpress as a particularly timely trade:
They have struggled to grow over the last two years, but prior to the recession, they were growing like gangbusters. The stock is cheap relative to the growth they should experience in a better economy. In terms of brand recognition, [OptionsXpress] is the No. 1 options broker in the industry.
Not surprisingly, optionsXpress continues to be our community's favorite play on the growing popularity of online options trading. In fact, the company's focus on options traders, which tend be more active and have more money than the average investor, have helped it earn historically higher returns on equity than more mainstream online brokers like E*TRADE, TD Ameritrade, and Charles Schwab. While shares of optionsXpress have significantly outperformed those same rivals over the past year, CAPS member tekennedy believes the valuation remains attractive:
This is a business generating a high ROE with the ability to grow. Option trading has been growing relatively quickly in recent history and should continue to experience growth due to low penetration and frequent airtime on investing shows, often being explained as portfolio insurance. ...
Simply put I see this as a good investment as it has a compelling valuation at today's pricing. Due to lower interest rates, net interest earned on customer accounts has decreased leading to temporarily lower earnings. In a normal environment I can easily see this company at around $1.50 in EPS giving them a P/E of about 10. Considering potential earnings growth and their strong balance sheet it seems the bar is low enough for an easy outperform.
What do you think about optionsXpress, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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