Intercontinental Exchange: Pull-back is a buy opportunity

Long-term, look for electronic trading, energy products trading, and clearing house function revenue streams to resume healthy growth rates. Further, ICE's Europe operations remain a market with a large potential upside. Also, forecasts that the de-leveraged, post-financial crisis era would slow energy product trading volumes to a crawl appear to have been premature: oil futures and related products are hanging in there, and a sustained bull market in oil prices in FY2010 would bolster that trend. Agriculture futures revenue should also register impressive gains in FY2010.

The First Call FY2009/FY2010 EPS estimates for ICE are $4.56 to $5.25.

Technically, Intercontinental's stock price is recovering from a correction to $80, following a dash to $120 earlier this year, but it has been a slow recovery. Nevertheless, the calculation remains here that IIs will continue to add to positions, and ICE's recent rise above the key, 50-day moving average provides technical evidence to support that forecast.

Stock Analysis: Intercontinental Exchange is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in ICE now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your ICE position before February 2010. Sell/Stop Loss if you were to buy shares in this company: $45.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.