OptionsXpress Holdings, Inc. [NDQ: OXPS] Feb. 7 [2 PM ] price: $24.45 Yield: 1.02%
52-week range: $20.78 - $34.95
OptionsXpress is an on-line discount brokeerage that handles equity, option, mutual fund, bond, futures and forex trading. This Chicago based firm came public in 2005 and has seen sales and earnings grow rapidly since.
2005 EPS were $0.79
2006 EPS were $1.15
2007 EPS were $1.55
2008 EPS estimates are now centered on $1.74 or plus 12.26% from last year.
The company is DEBT FREE - no short-term or long-term debt. They held $185 MM in treasury cash as of September 30, 2007 or almost $3/share.
OXPS carries a trailing P/E of 15.8X and a forward multiple of just 14.1X 2008 estimates.
This compares with previous peak P/E levels of 33X, 29.5X and 22.6X in 2005 - 2007 respectively. Previous best buying opportunities were at 15.8X in the Spring of 2005 when the shares traded for $12.48 and last August during the market turmoil when OXPS shares briefly touched $20.78. At that time OXPS shares were 13.4X what turned out to be full year 2007 earnings.
In 2005 the shares rallied from the $12.48 low to $33.94 [+ 171%] over just 12 months. From the August 2007 low these shares jumped from $20.78 to $34.95 or + 68% in under 5 months. OptionsXpress has a Beta of 1.3 so these shares tend to move quickly in both directions.
Risk? The absolute low prices hit in 2006 - 2007 were $20.75 and $20.78 when earnings were substantially lower than now. The current P/E is quite reasonable for a growth stock and history has shown that when the market mood turns more positive these shares will command a much higher multiple.
In the meantime the extreme volatility is likely to sustain a brisk trading pace for OptionXpress customers. With no debt, cash in the bank and a historically low valuation these shares look ripe for a good trade.
Both 'call' and 'put' options on OXPS offer tremendous time premiums for those willing to sell volatility right now.
I can envision an 18X multiple on the forecast $1.74 EPS for 2008 leading to a target price of at least $31.32 or up 28% by year-end. That may turn out to be conservative if market action turns more positive as OXPS shares exceeded that goal price by dollars during each of the past two years.
Disclosure: I own OXPS shares and I am short both put and covered call options on OXPS.
52-week range: $20.78 - $34.95
OptionsXpress is an on-line discount brokeerage that handles equity, option, mutual fund, bond, futures and forex trading. This Chicago based firm came public in 2005 and has seen sales and earnings grow rapidly since.
2005 EPS were $0.79
2006 EPS were $1.15
2007 EPS were $1.55
2008 EPS estimates are now centered on $1.74 or plus 12.26% from last year.
The company is DEBT FREE - no short-term or long-term debt. They held $185 MM in treasury cash as of September 30, 2007 or almost $3/share.
OXPS carries a trailing P/E of 15.8X and a forward multiple of just 14.1X 2008 estimates.
This compares with previous peak P/E levels of 33X, 29.5X and 22.6X in 2005 - 2007 respectively. Previous best buying opportunities were at 15.8X in the Spring of 2005 when the shares traded for $12.48 and last August during the market turmoil when OXPS shares briefly touched $20.78. At that time OXPS shares were 13.4X what turned out to be full year 2007 earnings.
In 2005 the shares rallied from the $12.48 low to $33.94 [+ 171%] over just 12 months. From the August 2007 low these shares jumped from $20.78 to $34.95 or + 68% in under 5 months. OptionsXpress has a Beta of 1.3 so these shares tend to move quickly in both directions.
Risk? The absolute low prices hit in 2006 - 2007 were $20.75 and $20.78 when earnings were substantially lower than now. The current P/E is quite reasonable for a growth stock and history has shown that when the market mood turns more positive these shares will command a much higher multiple.
In the meantime the extreme volatility is likely to sustain a brisk trading pace for OptionXpress customers. With no debt, cash in the bank and a historically low valuation these shares look ripe for a good trade.
Both 'call' and 'put' options on OXPS offer tremendous time premiums for those willing to sell volatility right now.
I can envision an 18X multiple on the forecast $1.74 EPS for 2008 leading to a target price of at least $31.32 or up 28% by year-end. That may turn out to be conservative if market action turns more positive as OXPS shares exceeded that goal price by dollars during each of the past two years.
Disclosure: I own OXPS shares and I am short both put and covered call options on OXPS.
