This Under-the-Radar Growth Stock Is Going to Soar After July 21
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This Under-the-Radar Growth Stock Is Going to Soar After July 21
09 mins
The stock market experienced a bout of volatility in June as investors navigated the fragile ceasefire between the U.S. and Iran, which had oil markets on edge. Plus, semiconductor giant Micron Technology released its latest quarterly operating results last month, which gave investors a fresh look at the state of the artificial intelligence (AI) boom.
These events led to a surge in trading, which tends to benefit the operator of the world’s largest online investing platform, Interactive Brokers (NASDAQ: IBKR). The company is scheduled to release its second-quarter 2026 operating results on July 21, and here’s why I predict its stock could soar in the aftermath.
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Interactive had a blockbuster June
Interactive Brokers earns a commission every time a client buys or sells a stock, futures contract, options contract, or cryptocurrency through its platform, so periods of heightened volatility are usually great for the company’s financial results.
Interactive is coming off a strong first quarter because the geopolitical conflict between the U.S. and Iran kicked off at the end of February and sparked extreme volatility in the stock market. The company processed an average of 4.37 million transactions per day during the three-month period, which was up 24% year over year.
However, the company’s momentum continues to build, reaching a crescendo in June with almost 5.3 million in average transactions per day, representing a whopping 53% jump from the same month last year. In fact, it was the highest number on record.
Interactive also ended June with 5.18 million client accounts, with net new accounts surging by 138% year over year. This, combined with strong growth in daily transactions, suggests Interactive could post a stellar set of second-quarter results.
Wall Street’s second-quarter forecast might be too conservative
Interactive generated $1.67 billion in total revenue during the first quarter, which was a 17% increase from the year-ago period. There were two primary components to that figure:
$613 million in commission revenue, which rose by 19%.
$904 million in net interest income, which is the interest Interactive earned on margin loans, client cash balances, and its own corporate cash. This number increased by 17%.
Wall Street’s average forecast (provided by Yahoo! Finance) suggests Interactive generated about $1.73 billion in total revenue in the second quarter, which would be an increase of 17% compared to the year-ago period. But in light of the record transaction volume in June (which followed a record result in May), I wouldn’t rule out a significantly better outcome when the company reports.
Interactive stock looks attractive on a forward basis
Interactive stock has already soared by almost 50% this year, so it’s crushing the S&P 500 and Nasdaq-100 indexes, which have returned 10% and 18%, respectively. But I think there’s more upside ahead from here.
Interactive generated earnings of $2.32 per share during the past four quarters, placing its stock at a price-to-earnings (P/E) ratio of 39.2. It isn’t necessarily cheap considering the Nasdaq-100 trades at a P/E ratio of 35.2, but that simple comparison doesn’t do justice to the potential opportunity at hand.
Looking ahead, Wall Street thinks Interactive’s earnings will increase to $2.87 per share in 2027, placing its stock at a forward P/E ratio of 36.5. Investors who are willing to hold the stock for at least the next couple of years might actually be paying a reasonable price today.
Plus, Wall Street’s forward earnings estimate might prove conservative if Interactive continues processing record transaction volume. I expect volatility to remain elevated for the rest of this year as investors navigate the increasingly complex artificial intelligence trade and also weigh the consequences of the midterm congressional elections in November, which could dramatically shift the balance of power in Washington, D.C.
Moreover, the Federal Reserve could hike interest rates at least once in 2026, which would passively increase Interactive’s net interest revenue and subsequently boost its overall financial results. As a result, I think Interactive’s second-quarter report on July 21 could mark the beginning of a sustained period of upside in its stock.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Interactive Brokers Group and Micron Technology. The Motley Fool recommends the following options: long January 2027 $43.75 calls on Interactive Brokers Group and short January 2027 $46.25 calls on Interactive Brokers Group. The Motley Fool has a disclosure policy.
