StoneX Group is setting up near a buy point ahead of its earnings report in less than two weeks. The financial services firm is the IBD Stock of the Day.
The New York-based firm is part of a leading industry group (investment banks and brokerages) that includes several top-performing stocks. Among those are Futu Holdings and Interactive Brokers.
StoneX, though, operates deep in the weeds of the financial world. The company provides a range of brokerage and financial services, including cross-border payments. It also handles commodity logistics and hedging, liquidity for fixed-income products, plus futures and options processing.
The firm serves more than 54,000 institutional, commercial and payments clients. It also has more than 400,000 retail clients. Together, StoneX manages nearly $8 billion in assets.
In the turmoil that followed the outbreak of the trade war, StoneX helped clients and international banks move physical gold into the U.S. ahead of possible tariffs. The transfer was so large, it showed up in the U.S. trade deficit in January, the company said in its most recent earnings conference call.
In the May 7 earnings report, Executive Vice-Chair Sean O'Connor said increased market volatility contributed to the firm's financial performance. Sustained volatility, he added, will be "yet another positive driver for the continued growth in our business."
Earlier this year, StoneX acquired R.J. O'Brien, the oldest futures brokerage in the U.S., a deal that strengthens its position in global derivatives. It also agreed to acquire Plantureux et Associes, a Paris agricultural commodities brokerage. That deal opened a strategic foothold in the French agricultural commodities market.
StoneX Expansion Plans
StoneX is highly geographically diverse. It saw about 6% of its 2024 revenue from North and South America, according to FactSet. Another 5.8% was from China, with the Asia-Pacific regions accounting for 58% of revenue overall. India was 5.5%. Saudi Arabia and Turkey were 4.8% each. Europe was a soft spot, at 2.4% of revenue.
The firm's global expansion plans include Latin America, where it signed a partnership with Bamboo Payment Systems to provide local payment services for its clients in the region. About a month ago, StoneX signed a letter of intent to acquire a Latin American wealth management firm, although terms had not been finalized.
StoneX has not announced when it will report June-quarter results, but it is estimated to be in early August. Analysts' consensus earnings estimate is $1.44 a share, for a year-over-year increase of 13.2%. Analyst consensus is that revenue will edge up 1% to $923 million, according to FactSet.
With trade tensions easing, investors will be looking to see how lower volatility affects the company's performance.
The firm has a three-year EPS growth rate of 16% and a sales growth rate of 27%, according to IBD Stock Checkup. StoneX has a Composite Rating of 97, the seventh highest in the 38-stock financial industry group.
Stock Of The Day Chart Analysis
StoneX stock tried to break out of a cup base July 9-10, but never made it far above the 97.17 buy point. The stock ducked back into its base, and has been forming a handle since then. The new buy point is 99.08.
The relative strength line should be close to new highs, just like the stock is. Instead, the RS line is closer to where it was at the base's low. That's a sign of weakness that investors need to watch. Institutional demand looks healthy enough, with an Accumulation/Distribution Rating of B- and up-down volume ratio of 1.4. The number of mutual funds holding StoneX shares dipped to 457 at the end of June from 463 in Q1, according to MarketSurge.
StoneX stock has a 21-day average true range (ATR) of 2.66%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
