The Chicago Mercantile Exchange is booming

Investor's Business Daily Chicago Mercantile's Unique Business Netted Big Stock Gains Friday December 31, 7:00 pm ET Jonah Keri A breakthrough new gadget or a revolutionary medical breakthrough can drive a stock to huge gains. If a company's business seems less exciting, though, don't necessarily let that scare you off. A leader with great growth can rack up big gains, regardless of its chosen endeavor. Chicago Mercantile Exchange (NYSE:CME - News) proved that point as one of the best stocks of 2004. The exchange provides a marketplace for agricultural commodities, plus interest rate, stock index and foreign exchange futures. Sounds dull, right? How much money can a firm make brokering deals on pork bellies? Plenty. From its debut in December 2002, Chicago Merc has been a highly profitable company. The exchange relies on volume to fuel both sales and earnings growth. As it's hit various volume milestones, its numbers have spiked in lock step. Revenue growth has surged to 43% from 6% in the last four quarters. Profit growth leapt 85% last quarter, the best result in the firm's eight reported quarters. The results have shown in its stock chart. After a few weeks of trading, Chicago Merc etched a base. It broke out in April 2003, just after the market had followed through on a new rally (point 1). New issues often need time to build up top ratings, but Chicago Merc had already amassed an 80 Composite Rating. The stock ran up 61% to a high of 79.30 in July 2003. It then forged a well-rounded cup-shaped base (point 2). Meanwhile, IBD was featuring the stock extensively, well before it hit the radar screens of most investors and mainstream media. NYSE Stocks In The News profiled Chicago Merc on Sept. 23 and Oct. 7, 2003. It would later be featured on Jan. 16 and Dec. 29, 2004, and has appeared numerous times in Where The Big Money's Flowing. Chicago Merc offered two buy points. It broke out from a cup-without-handle when it shot past the top of its base in January 2004 (point 3). The stock then carved a three-week high handle (point 4), followed by another breakout in late February (point 5). That's when it began earning its status as one of the biggest winners of 2004, nearly doubling from those breakouts to a high of 148.38 in July. Better still, the stock's price and volume action was calm; nothing triggered sell rules to prompt you to sell. Indeed, Chicago Merc found support above its 50-day moving average the whole way up. It formed a lopsided pattern from there, then broke out yet again in late September (point 6). Those who bought and held have found several chances to add shares, with the stock forming and breaking out of short patterns and bouncing off key support levels. >