Another name to ride the trading boom than Robinhood that’s cheaper
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — Robinhood (HOOD) gets lots of attention in the market given its rapid user growth and colorful approach to exposing millions of young people to investing. Its share price has increased almost 400% over the last year as it became seen as one of the primary beneficiaries of the new bull market. In this business, increased activity equals increased revenue and profit. Activity is on fire right now, all over Wall Street. Which brings me to Interactive Brokers (IBKR) — a cheaper stock with an identical driver, which joined HOOD on our Best Stocks in the Market list this summer. Relative to HOOD, it’s underappreciated, undervalued and under-owned. But that is starting to change. IBKR was just added to the S & P 500 this week, with its addition taking effect today. With its $28 billion market cap, it joins other recent fintech additions like Coinbase (COIN) and Block (XYZ) in the S & P Financials sector and related ETF (XLF) . This means more analyst coverage and the benefit of being part of large index funds that must repeatedly buy the stock as their assets under management increase. Sean’s going to get into the recent earnings report, I’ll be back with the technical set-up, which is a classic low-volume retest of the breakout level. Best Stock Spotlight: Interactive Brokers (IBKR) On the list since: 7/8/2025 One-year price chart with moving averages, RSI: Sean — IBKR is the 4th largest prime brokerage behind Goldman, Morgan Stanley, and JPM, according to Quartr. They hold a substantial market share among proprietary traders — these traders favor providers that deliver the highest quality when it comes to execution, tech, and prime services, and IBKR is delivering on that expectation. As of their last earnings, the company added 250,000 new accounts which brings the running total for the year to 528,000 — exceeding the total of all additions for 2023. Options and futures trading grew 24% and 18% year-over-year, respectively. These volumes are leading to higher earnings. IBKR reported an industry-leading pre-tax profit margin of 75% in Q2 2025, up from 72% the prior quarter. IBKR has grown revenue at a 31% CAGR the past 3 years which is impressive, but bottom line earnings have grown even faster at a 41% CAGR for net income. HOOD is pushing the industry to innovate, but IBKR is quietly maintaining a competitive edge when it comes to product development. They expanded to 24 hour trading and during their latest earnings call, the company reported 170% volume growth for overnight trading. It’s not just IBKRs trailing financials that are impressive. In the coming earnings report in October, they expect 11% revenue growth, 19% operating income growth, and 18% EPS growth. It’s not a sleepy financial stock by any means. While you’re paying a premium to the market based on earnings, you’re getting exposure to the expanded trading theme in a much cheaper vehicle than HOOD, albeit with slightly lower earnings growth expectations. All of this points to a broader theme: people are trading more and IBKR is one of the biggest beneficiaries of that activity. Whether it’s more sophisticated retail investors drawn to 24-hour access, or professional traders relying on IBKR’s execution and prime services, the company is capturing a larger share of the surge in trading volumes. That increased activity is reflected on the income statement with stronger earnings growth and expanding margins. Risk management Josh — In order for a retest after a breakout to be successful, the prior resistance must hold while the selling should be relatively light. This tells you that the profit-takers aren’t being super-aggressive and that the longs are staying put. That’s precisely what I am seeing here so far. After the announcement of IBKR’s index addition and the company’s earnings report, the stock pulled back while relative strength hung in there at around 50. That rising 50-day moving average is at $60 — precisely the level that formerly served as resistance for the stock back in January and February of this year. I think this retest will be successful and the stock could get going again in its new trading range. A break above $65 would be a signal to traders that this thing is truly on its way. Longer-term investors can use $50 as their line in the sand. A break below and the trend is busted. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. 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