Why this investor loves TMX Group stock

Kingwest & Company chief investment officer Richard Fogler said TMX Group (TMX Group Stock Quote, Chart, News, Analysts, Financials TSX:X) remains a high-quality financial infrastructure name with a strong competitive position.

Fogler noted TMX owns key Canadian market infrastructure, including the Toronto Stock Exchange, Montreal Exchange, Canadian bond clearing assets, NGX and Trayport, giving it a gateway position in financial and resource markets.

“This stuff is not a trading platform. It’s a toll road,” Fogler told BNN Bloomberg’s Market Call on April 27. “Everybody who uses these things must pass through.”

He said TMX’s proposed acquisition of Cboe Canada and Cboe Australia would strengthen that position further. Cboe Canada is the only remaining alternative trading platform in Canada not owned by TMX, while Cboe Australia would deepen TMX’s exposure to global mining and natural-resource listings.

Fogler said TMX and the TSX Venture Exchange already account for nearly half of global mining listings, while Australia is the second-largest market for those listings.

“Combine those, you’ve got by far the powerhouse for mining and natural resources,” he said.

Fogler acknowledged the deal could face regulatory scrutiny and said it would be a setback if it failed, but not one that changes the core investment case.

“It doesn’t make it worse,” he said. “It just doesn’t make it as much better as it would have been had that deal gone through.”

TMX shares have gained 1% over the past 12 months and 99.2% over five years. Of the analysts covering the stock, six rate it “Buy,” two “Hold” and none “Sell,” with a consensus price target of $63.07.

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