US Edition IG Group
435.1p -2.8
Questor says BUY
Indeed, it already has – and next Tuesday's first-quarter trading update should be very impressive.
IG has already revealed that it benefited from record levels of client activity during the recent market volatility – despite it being holiday season in the majority of the countries in which the group operates. Indeed, the business issued an unscheduled trading update a couple of weeks ago after a successful August.
Because of this, IG expects first-quarter revenues will be in excess of £94m, compared with £79.1m in the equivalent period last year. This would represent growth of at least 19pc. The comments have posted a series of earnings upgrades.
Credit management has been tightened and the group expects that its doubtful debt charge for the quarter will be less than 1pc of total revenues. This, obviously, is good news.
"August saw the FTSE 100 move in a range of more than 100 points on 18 out of the 22 trading days – something that in more normal market conditions would only happen three or four times a month," said David Jones, the group's chief market strategist.
Ironically, although the company benefits from volatility, the shares have been hit by the broader market sell-off and they are down from their high of 553p seen in October that year. The falls have, however, made the shares even more attractive for income seekers.
The prospective yield in the current year is almost 5pc, rising to 5.3pc next year. Questor is of the opinion that the shares offer both solid income and good growth prospects – especially if the high volatility continues. This is very likely.
The shares are up 71pc since their initial tip at 254p on May 10, 2009, compared with a FTSE 100 up 16pc.
Questor upgraded the IG to a buy from hold at 440p on June 10 – and it is a touch below the level now.
The average target of the 15 analysts monitored by Bloomberg on this measure is 505.8p and the shares remain a buy.