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Amidst the jealous love triangle created by the intruder Intercontinental Exchange (NYSE:ICE) against incumbent Chicago Mercantile Exchange (NASDAQ:CME) over Chicago Board of Trade (BOT), and all the loud babble over Nasdaq's (NASDAQ:NDAQ) inability to take over the London Stock Exchange, one such company that has been flying under the radar when it comes to M&A is the International Securities Exchange (ISE).

ISE is the largest U.S. equity options exchange with around 27% of the overall market. Options trading has been on the rise - just ask OptionsXpress (NASDAQ:OXPS) - or you could see the March activity numbers.

In fact, ISE's market share dropped from 30% to 27.3% even as its volumes rose by 26.7% y/y. With quarterly earnings growth of over 50%, a humble market cap of less than $2 billion, and a 19 multiple, ISE is cheaper than most of its well known rivals. Last month, its CEO had this to say on the occasion of the exchange trading its 2 billionth options contract:

Looking ahead, we expect continued growth of the industry as investors benefit from the use of options as a risk management tool.

Additionally, Banc of America Securities analyst Christopher Allen upgraded the stock to "Buy" from "Neutral," last month, and praised the exchange's operations and management team. I find it surprising therefore, that no one has attempted to pick up ISE. Nevertheless, I believe the company is growing at a good clip and deserves a higher multiple and I think the stock is headed north from here. If its gets bought out, that's a bonus.

Disclosure: I am long ISE but my position can change at anytime without notice.

ISE 1-yr chart

ise chart

Source: International Securities Exchange Flies Under the M&A Radar