3 brokerage stocks that will rise more than 20% in 2024 to watch for next year

This year started strong given initial optimism about potential interest rate cuts by the Federal Reserve, a strong labor market, strong consumer spending and technological developments.

However, optimism related to interest rate cuts has tempered concerns related to geopolitical tensions in the Middle East and renewed inflation fears. Uncertainty about interest rate cuts has increased customer volatility. Although the Fed has cut interest rates by 100 basis points since September, it has hinted at smaller cuts for 2025.

The S&P 500 has hit record highs more than 50 times this year, driven by extreme volatility, increased client activity amid election results and uncertainty about interest rate cuts. Furthermore, the US presidential election results kept the momentum going with optimism emerging on the back of expected tax cuts and expansionary fiscal measures. These factors led to an increase in commercial activities. As such, trading revenues are expected to continue to increase for brokerage firms, given the rise in new brokerage account openings. Against this favorable backdrop, investors can bet on it BGC Group Company BGC, Robinhood Markets, Inc Hood and Interactive Brokers, Inc IBKR as these companies are well positioned for growth in the coming year.

Industry players are offering new products and services including launching cryptocurrency offerings and several tools to meet the growing demand among investors. Apart from these, commission-free models and 24-hour trading are some other features that brokerages are introducing to gain market share. With markets expected to perform well in 2025, brokerages are likely to benefit from this.

We selected the three brokerage stocks mentioned above with the Zacks Stock Screener. These stocks have a Zacks Rank #3 (Hold) or better and are up more than 20% since the beginning of the year. Furthermore, these companies are expected to post earnings growth this year and in 2025 and see positive estimate revisions. You can see The complete list of today’s Zacks #1 #1 (Strong Buy) stocks is here.

Price performance year to date

Image source: Zacks Investment Research

BGC GroupHeadquartered in New York, it is a financial brokerage and financial technology company serving the global financial, energy and commodity markets. The company operates globally in all major geographies, including the US, UK, Asia, Other Europe, Middle East, Africa, France and Other Americas.

Basra Gas Company’s total revenues have witnessed a compound annual growth rate (CAGR) of 5% over the past six years (2017-2023). Growth was primarily driven by higher brokerage revenues, reflecting a CAGR of 3.5% over the same period. The upward trend on both metrics continued through the first nine months of 2024, driven by higher FX, energy, commodities and shipping volumes.

Furthermore, BGC Group’s strategic acquisitions to expand its market share combined with high secondary market volumes are likely to support its overall expansion. Last October, the company acquired Sage Energy Partners to become the world’s first “one-stop-shop” for environmental brokerage. It also agreed to acquire OTC Global Holdings to enhance its ECS brokerage services. These acquisitions diversify BGC’s customer base and drive its overall performance.

Additionally, in September this year the company launched the FMX Futures Exchange to trade SOFR futures, with US Treasury futures expected to be added in the first quarter of 2025. This will help with the company’s price revenue.

BGC, which has a market cap of $4.3 billion and a Zacks Rank #1, is up 21.2% this year. The Zacks Consensus Estimate for its 2024 and 2025 earnings has been revised 6.5% and 7.1%, respectively, within the past two months. The company’s earnings are also expected to grow by 20.7% and 7.1% in 2024 and 2025, respectively.

Robinhood Marketsheadquartered in Menlo Park, California, is a financial services company that offers cryptocurrency trading, stocks, options, ETFs, cash management, margin lending, securities, and Robinhood Gold. The Company operates in the United States, United Kingdom, and select jurisdictions in the European Union (EU) through its applications and subsidiaries.

Robinhood’s product diversification initiatives to acquire customers combined with opportunistic acquisitions to diversify its business will support its financials. In November, the company agreed to acquire TradePMR, entering the registered investment advisor filing market. In June, it agreed to acquire Bitstamp Ltd. To expand the scope of its cryptocurrencies. Earlier this month, the company announced its plans to expand into Asia in 2025, with Singapore being the headquarters for the region.

Additionally, HOOD announced a tax share benefit for its investors earlier this month. In October, it introduced Index Options and Robinhood Legend to cater to web traders. In March, it launched the Robinhood Gold Card for its customers and ventured into credit cards. Furthermore, the company plans to launch futures (a nine-figure revenue business according to the company) in early 2025.

Furthermore, higher market activity coupled with the company’s commission-free business model and industry-leading margins are likely to boost its transaction-based revenues. The metric saw a compound annual growth rate of 46.4% over the four years ending in 2023, driven primarily by stock and options trading. The uptrend continued through the first three quarters of 2024, driven by a rise in options and cryptocurrency trading.

The Zacks Consensus Estimate for HOOD’s 2024 and 2025 earnings has been revised 8.1% and 12.6%, respectively, over the past month. Its earnings are expected to see an annual jump of 231.2% this year and a rise of 21.8% in 2025. The company has a market cap of $33.9 billion and currently carries a Zacks Rank of 3. The company’s shares have risen significantly. 200.9% since the beginning of the year.

Interactive Brokersheadquartered in Greenwich, CT, operates as an automated global electronic market maker and broker. The company operates worldwide with offices in Canada, the United Kingdom, Ireland, Switzerland, Hungary, India, China (Hong Kong and Shanghai), Japan, Singapore and Australia.

IBKR’s technological superiority combined with its focus on developing proprietary software to automate broker-dealer functions will help its revenues. The Company’s total net revenue reflects a CAGR of 17.9% over the past five years (2018-2023), with momentum continuing into the first nine months of 2024. This rise was primarily driven by higher interest and commission income and the restructuring of the Company’s business. efforts.

Furthermore, the company’s technology excellence has kept compensation expense compared to net revenue (11.5% in the first nine months of 2024) very low compared to its peers. Interactive Brokers’ efforts to strengthen its global presence and strong capital distributions are other positives. In November, it launched Plan d’Epargne en Actions accounts to enhance its offerings to its French clients. Furthermore, IBKR launched GlobalTrader, enabling investors around the world to trade stocks through mobile applications. The company was also one of the first brokers to offer overnight trading on US stocks and exchange-traded funds. IBKR Lite also allows investors to trade commission-free and offers cryptocurrency trading with lower commissions than cryptocurrency exchanges.

IBKR, which has a market capitalization of $74.3 billion, is up 112.2% year-to-date. Although the Zacks Consensus Estimate for its 2024 earnings was lowered by 1.4%, it was revised marginally upward for 2025 over the past two months. Moreover, the company’s earnings are expected to grow by 18.4% and 3.5% in 2024 and 2025, respectively. IBKR carries a Zacks Rank of 3 at present.

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