FC Stone enjoys weighing the risks of a given situation

Posted Jan 15th 2008 7:34PM by Joseph Lazzaro
Filed under: International Markets, Stocks to Buy

One of the characteristics of this decade's bull market has been the emergence, use, and growth of derivatives, options and futures products, both for hedging and for pure investing purposes, and a company in this segment worth a review is FC Stone.

FCStone Group, Inc. (Nasdaq: FCSX) provides risk management consulting and transaction execution services to commercial commodity intermediaries, end-users and producers. An FCSX unit also offers grain merchandising services for grain buyers/sellers in the U.S. and overseas; the company also ships about 100 million bushels of grain per year.

Analysts like FCSX's account depth and breadth: more than 10,000 retail accounts, 3,500 domestic, and 200 international. The Reuters FY 2008/FY 2009 EPS consensus estimates for FCSX are $1.44 to $1.76.

The risks? Analysts are keeping an eye on technological developments in futures / options risk management technology, as well as the entrance of competitors to the evolving sector.

The First Call mean rating for FCSX is: Buy [22 firms]. Mean 2008 target: $41.00 [high: $46, low: $29].

Stock Analysis: FC Stone is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from FCSX's shares. Sell/Stop Loss if you were to purchase shares in this company: $28.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: commodities, derivatives, FC Stone, FcStone, FCSX, futures, hedge funds, investment funds, options, risk management, wealth management