With the election over, markets are betting that stocks will continue to rally. Not only that, but that investment activity may even tick higher. That could bode well for wealth managers and brokerage firms.
These companies tend to benefit from increased economic activity. More buying and selling of stocks means more fees. Even in a world where some brokerages offer zero trading fees, other fees can handily bump up the bottom line.
That’s why brokerage firms like Interactive Brokers (IBKR) could see massive returns from here. IBRK runs a more robust trading platform than other online brokerages, with more asset classes and trading features.
Shares have already soared over 90% in the past year, on the back of a 15% rise in revenues. More trading activity means that revenue growth rate could accelerate.
Plus, with shares valued at 24 times earnings, IBKR is still trading at a slight discount to the overall stock market.
Action to take: Even with shares spiking to new 52-week highs, the longer-term uptrend still looks attractive. Investors may want to start accumulating shares at current prices, using any pullbacks to continue building up a position.
At current prices, Interactive Brokers also pays a 0.7% dividend.
For traders, the March 2025 $200 calls, last trading for about $3.40, could see high double-digit returns or better on a continued rally into early next year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.