Tuesday, February 14, 2006

Follow Up: OXPS

Shares of OptionsXpress (OXPS) are up almost 20% since we first brought you the stock on Jan 3:

Options trading is breaking out like wildfire -- 1.5 billion options were traded in 2005 -- a 27% spike from 2004.

OptionsXpress is beautifully positioned to harvest the fruit of the current option craze. The company boasts 100,000 customers; 80% of its revenues come from option trading.

Not one analyst sell rating across the Street.

Experts estimate that of the roughly 30 million online brokerage accounts, between 10% and 15% trade in options, pegging the market close to 3.5 M investors who trade in options.

OptionsXpress only has only a small piece of that market, but not for long -- we forsee plenty of growth opportunity for OXPS. The more intimate US investors get with option writing, the better OXPS's prospects; surprisingly, online brokerage giants like Ameritrade (AMTD) have not been able to fully penetrate OXPS's niche.

We initiate coverage today with a buy rating.

This stock still has legs as its competitive position has remained strong amidst increasing competition.

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