Intercontinental Exchange Will Benefit From A Correction And Grow Your Wealth For Decades To Come

Dec. 16, 2020 9:50 AM ETIntercontinental Exchange, Inc. (ICE)8 Comments


  • No matter what causes volatility in the market, ICE is set to benefit, greatly boosting its financials during these periods.
  • The company is very focused on returning capital to shareholders both through rapid dividend increases and aggressive buybacks. We forecast returns near the low double digits going forward.
  • ICE is a stock that should keep creating wealth for decades to come while temporarily boosting its performance under market uncertainty.
  • Looking for a helping hand in the market? Members of Wheel of Fortune get exclusive ideas and guidance to navigate any climate. Get started today »

During times of market highs, investors tend to discuss the possibility of an upcoming correction. In my recent Amazon (AMZN) article, I highlighted why equities are more likely to remain in high demand due to the lack of real returns in bonds. However, we can't exclude the possibility of a healthy correction in the market, which may be a great opportunity to scoop up some equities.

In this article, we want to take a look at an investment idea that will not only benefit from a potential correction, but at the same time is an excellent long-term wealth generation machine. That is shares of Intercontinental Exchange (NYSE:ICE), the owner of the New York Stock Exchange.

The benefits of a potential correction

The reason exchanges like Intercontinental benefit from volatility is because they generate higher transaction volumes due to increased buying and selling, which means that they receive higher fees and achieve higher transaction-based revenues.

While the company's stock may also tumble during a period of violent volatility, its financials should benefit. For example, if we take a look at ICE's revenues over the past several quarters, we can see a distinct jump in its energy futures and options contracts section during this year's Q1, followed by a not as impressive but equally nice Q2 bump. Everyone remembers March's brutal selloff. During that quarter, the segment's revenue increased by a massive 56.4%. Following April's rebound, Q2's segment revenues were also strongly boosted by 15.5%.

Source: Key metrics release, Author

During the last selloff, energy futures were particularly active due to oil's crazy roller coaster ride. However, in a future correction, ICE is set to benefit from all sorts of increased activity volumes, like agriculture futures, which are currently mostly stable.

Source: Key metrics release, Author

No matter what causes volatility

Holiday Sale: $888/Year (25% Discount!!!)

Wheel of FORTUNE is a one-stop-shop, covering all asset-classes (common stocks, preferred shares, bonds, options, commodities, ETFs, and CEFs), across all sectors/industries.

The wide scope of the service allows us to cater all types (of investors) and (investment) needs/goals, making WoF a true one-service-fits-all.

Our offering includes, but isn't excluded to, the following:

Wheel of Fortune by the Fortune Teller

Join Wheel of FORTUNE to Increase Your Portion!

Holiday Sale: $888/Year (25% Discount!!!)

This article was written by

Nikolaos Sismanis profile picture
One-Stop Shop For Ideas & Portfolios, Covering All Asset-Classes & Sectors

Hi there!

I hold a BSc in Banking and Finance. Here, on Seeking Alpha, I cover a variety of growth stocks and income stocks, including identifying those with the highest expected return potential, and a solid margin of safety.

Currently contributing as Promoting Author to the "Wheel of Fortune" marketplace.

Feel free to contact me at any time, and follow me here on S.A. for regular content and updates!

Happy investing!


Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (8)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.