Interactive Brokers Is One Name That’s Lost in the Brokerage Bonanza
Welcome to the final month of the 2019 trading year. The one main question facing every trader and investor alike here in December is simple…
Will December 2019 end a fantastic investing year with a Santa Claus rally?
Or will 2019 end the way last year ended – with a massive market correction?
In future Trade of the Day issues, as we move into this critical final month of 2019, this will be our major focus. But in the meantime, we have a potentially undervalued opportunity to introduce to you today – and it comes from a sector that’s been making some huge news.
So let’s dive in…
As I’m sure you know, Charles Schwab shocked the brokerage industry last month by eliminating trading commissions.
And then, as if that weren’t enough, the company followed that major news by announcing last week that it’ll buy rival TD Ameritrade in an all-stock deal valued at roughly $26 billion.
If all goes as planned, this deal will close in the second half of 2020 – and it will create a brokerage giant with more than $5 trillion in combined assets.
On this news, shares of Charles Schwab jumped 13.6%, going from $44 to $50. TD Ameritrade did even better, jumping 31.25% from $40 to $52.50.
With both of these major brokerage houses popping, it pays to examine the reaction in the brokerage house that I feel is actually the most innovative of the group: Interactive Brokers (Nasdaq: IBKR).
Founded in 1977 and headquartered in Greenwich, Connecticut, Interactive Brokers has moved up only 4.8% – from $46 to $48.25 – on the news of this massive brokerage consolidation.
But if you take a closer look, you’ll see that Interactive Brokers is the one that should be receiving most of the investor attention.
First off, like most of its competitors, the company began offering commission-free U.S. stock and exchange-traded fund trading in September via a new service called IBKR Lite.
I really like Interactive Brokers’ “Interactive Advisor” feature, which offers advancements such as robo-offerings that allow you to invest in a globally diversified portfolio that continually rebalances itself.
But what I like most is its fractional stock trading feature. For instance, if you don’t have $1,880 to buy one share of Booking Holdings, Interactive Brokers allows you to buy a fractional share – thus eliminating any barriers to investing in more expensive securities.
Lost in all the recent brokerage hoopla is the fact that Interactive Brokers is the one name that’s truly making advancements worthy of your investment capital.
Action Plan: As a “sympathy” play, buying Interactive Brokers stock around the $47 level seems like a logical and safe entry point. With its new innovations – such as buying and selling fractional shares – combined with the major deals now occurring between Charles Schwab and TD Ameritrade, Interactive Brokers is an investment that makes a lot of sense. To get in on all the trading action, join me in The War Room today!