Credit Suisse Recommends Buying This Defensive Exchange Operator To Take Advantage Of Ongoing Market Volatility

As Credit Suisse reports, Cboe Global Markets is one of the most defensive components of any portfolio during these uncertain times, and is firmly positioned the most defensive component.

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Cboe is rated as one of the top exchange sector picks by the bank as one of the top exchange companies. The bank's analyst Gautam Sawant believes Cboe shares will benefit from the momentum around the index options market growth, given the uncertainty surrounding an economic slowdown, and its potential impact on uncertainty.

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Shiller wrote this in his letter to investors: “In our opinion, the company is likely to expand its valuation in 2023 as the company continues to grow transactions, as investors start to see the defense market more positively, and as Data and Access solutions continues to grow.”

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According to Sawant, based on this setup, Cboe is well-positioned to consistently deliver a good ratio of risk to reward than the broader market sectors due to its valuation of just 18 times forward earnings, compared to a multiple of 24 times for its broader market sectors. Despite a strong fundamental backdrop last year, shares of the company failed to appreciate in value over the course of the year, but profits per share look attractive as well today.

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Since the stock only fell by 3.8% in the year 2022, a positive return on investment can be made due to the fact that investment was positive.

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Awant went on to mention that with the deregulation of derivatives being increasingly popular and customers adopting short-dated, daily expiration options, the CBOE has the opportunity to capitalize on this growth through its entrenched index options complex, which is well positioned to grow in an economy where proprietary index options are being sought and SP500/VIX options are being sought.