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5 Reasons That Make GAIN Capital (GCAP) Stock a Must Buy

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GAIN Capital Holdings is a promising stock now due to its sound inorganic growth strategies and impressive cost-control initiatives. Also, the company’s steady capital deployment activities continue to enhance investors’ confidence.

Moreover, continual rise in interest rates and lower commercial tax rate are likely to further support its bottom line.

Also, the company has an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate in three of the trailing four quarters with an average beat of 66.4%.

Further, it has been successful in gaining analysts’ confidence. Its current-year earnings estimates have been revised 8.6% upward, over the last 30 days. As a result, the stock carries a Zacks Rank #2 (Buy).

Shares of GAIN Capital have jumped 41.1% over the past 12 months compared with the industry’s rally of 34.6%.

 

Why the Stock is Worth Buying

Inorganic Growth Strategies: GAIN Capital acquired the client base of FXCM’s U.S. operations in 2017, which boosted the performance of its retail trading service — FOREX.com — making it the largest provider of retail FX in the United States.

Revenue Strength: Though the company has witnessed a decline in net revenues over the last three years, total revenues are projected to grow at a rate of 22.8% in 2018 (compared with the industry average of 5.4%).

Prudent Expense Management: The Bedminster, NJ-based lender has successfully reduced its operating expenses at a CAGR of 14% over the last three years (ended 2017). Such cost management initiatives will continue supporting its bottom-line growth.

Steady Capital Deployment Activities: The company remains committed to enhancing its shareholders’ value. In May 2017, it announced the expansion of its share buyback program to $35 million.

Stock Looks Undervalued: GAIN Capital’s current price-to-book and price-earnings (F1) ratios are lower than the respective industry averages. Based on these ratios, the stock seems undervalued, which makes it a good pick for value investors.

Other Stocks to Consider

Some other stocks in the same space worth considering are E*TRADE Financial Corporation , Evercore (EVR - Free Report) and Greenhill & Co. . All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

E*TRADE’s Zacks Consensus Estimate for current-year earnings was revised 1.1% upward for 2018, in the last 30 days. Also, its share price has increased 89.9% in the past 12 months.  

Evercore’s current-year earnings estimates were revised 4.9% upward, over the last 30 days. Further, the company’s shares have jumped 60.8% in a year.

Greenhill’s Zacks Consensus Estimate for current-year earnings was revised nearly 6% upward, over the last 30 days. Moreover, in the past year, its shares have gained 41.3%.

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