Buy TMX Group
We are adding the TMX Group (TSX:X, OTC: TMXXF) to the Dividend Champions portfolio.
A drop recent drop in TMX Group’s stock price, which we believe was an overreaction to some recent news, has made its yield an attractive 4.4%.
TMX Group is the main provider of trading platforms for equities, fixed income and derivative instruments in Canada. Last month it got some increased competition when Nasdaq Inc. bought Chi-X (Canada), which gives Nasdaq direct access to the Canadian equities market.
We believe that fears Nasdaq will hurt TMX’s business are overblown and that TMX is now undervalued relative to its global peers. It has an estimated fair value of C$44/US$32. It currently trades around US$26.60.
We will publish a full report on the company in the January issue of the Canadian Edge.