It didn't take long for NYSE Group (NYSE: NYX ) to learn how to play the same crowd that owned pricey seats on the 214-year old exchange. In its first quarter as a public company, the company posted earnings of $0.24 a share. That's better than the $0.22 per share that the company had earned a year earlier and in line with the lone analyst lending a $0.24 estimate into the Thomson Financial Network pool of Wall Street profit targets.
Things look a whole lot better for NYSE Group if you back out some one-time merger-related compensation costs that were only partly offset by a gain on an equity sale. Without those items, earnings soared 41% higher to hit $0.34 a share.
It's not a perfect world. Even that adjusted growth spurt ignores Archipelago's showing in the first quarter of 2005. Remember Archipelago? The parent company of the ArcaEx electronic trading exchange is what made this possible when the New York Stock Exchange approached the fast-growing trading platform with a merger proposal last year.
Those simple nuptials rocked the financial exchanges as companies like Nasdaq (Nasdaq: NDAQ ) , Chicago Mercantile Exchange (NYSE: CME ) , and CBOT (NYSE: BOT ) have either been busy mapping out their own shopping sprees or enjoying healthy stock gains as buyout speculation lifts the various trading platforms.
Even the seemingly sleepy American Stock Exchange is now positioning itself to become a for-profit entity. And let's make sure we all bring valid passports to the party as NYSE and Nasdaq both seem to be on bended knee to gain the dowry of the London Stock Exchange.
All of this favorable buzz is likely to come as welcome news to Motley Fool Rule Breakers subscribers. Even though the once-stodgy NYSE Group may seem like an ill-fitting name on the scorecard of David Gardner's premium growth stock research service, it's there because David recommended Archipelago to readers long before the NYSE popped the question.
Newsletter subscribers were advised to buy the stock in mid-December of 2004, when the stock was being swapped for a mere $20.45 a stub. Thanks to Archipelago's improvement and the buzz over its business combination, those same shares are trading 269% higher today.
It's been a big winner, but that's just one part of the picture. In sum, 22 of the 38 cumulative Rule Breakers recommendations are crushing the market. It's why the only thing that's better than finding a sector that's surging on consolidation fever is finding that same sector early. David was able to do that with Archipelago. With NYSE Group bent on cutting costs, improving operations, and gaining back market share, former Archipelago investors appear to be in good hands -- with lofty gains -- in the new NYSE Group parent company.
Ready to buy into the next Archipelago? What will David recommend next? You can read about all of his past picks -- including the two stocks that were singled out last night in the brand new May issue -- with a free 30-day trial subscription to the market-crushing newsletter service known as Rule Breakers.
Longtime Fool contributor Rick Munarriz does not own shares in any of the companies mentioned in this story, but if he were an exchange, he would go public, too. TheFool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.