CME Group, Inc. (NASDAQ:CME)

Because the Pro team says so. I've really got nuttin' beyond that.

1. Risk management will continue to rise in prominence, and futures volumes will reflect that.

2. Have you seen the profitability of this business? Geez.

3. Scale, network, and reputational advantages. Scale and network look intact after NYSE/Deutsche Boerse collapse. MF Global impact on reputation likely temporary.

4. Return of capital to shareholders -- see new dividend policy.

5. Asset light business, great tough-to-replicate properties.

MF Pro recoomendation

12/17

S. Walker believes new revenue steam from central clearing of derivatives has not been priced into stock.

CME

Hilary Kramer likes them and says she wants to build a position.

Commodities will skyrocket in the next five years as food prices rise substantially.

Great Profit margin. Interest rate volume is low recently... BUT commodity and energy trading should increase. As high frequency trading increases, so will the profits for all exchanges. ICE is the only major competitor, but has less recognition and competitive advantage.

As a brokerage, it will not be prey to the whims of individual stocks, but rather, the beneficiary of increased market volumes as more investors come back into the market.

Piotroski screen.

A little high on the P/E for a value investor as myself, but other than that it fits my criteria as well. I'm not going to argue with Piotroski's success.

big things are

strong buy

insider buys

Mercantile exchange has significant share of derivatives market. Could benefit from financial reform. This business scales pretty easily.

COMING BACK

There is nothing but upside here.

I believe that option trading will continue to grow at an even faster pace than it has been. ( I believe 25%+ annually over the last five years)

I also that think that as FinReg sets in, third-parties will be required to clear all Forex and other derivitive trades. CME stands to benefit from that.

*I also like CBOE right now at the current almost 52w low of $238 for the same reasons.

$640 trillion deritive market heading their way with the financial refom bill

It collects it's income whether the market is up or down.