To view volatility as an asset you need to be a certain type of investor, perhaps a trader, who thrives at a time when the rest of the market is having the jitters. CMC Markets (CMCX) allows such investors to harness volatility. The FTSE 250 investment platform offers a range of contracts for difference (CFDs) – derivatives that allow you to take leveraged bets on asset price moves – alongside other spread betting instruments that retail and institutional investors find useful.
- Volatility is a bonus for the shares
- Business is well diversified
- Still plenty of room for growth
- Crackdown on costs
- Competition is fierce in the sector
- Very poor visibility
- Regulatory pressures
CMC’s operational performance does not mirror the market, but instead often reacts to its highs and lows. Its income soared in the difficult early days of the pandemic, for example, when management reported extremely high trading volumes and client wins as a result of market volatility. In contrast, trading waned and the company’s price/earnings ratio sank in 2021, when the immense surge in technology and meme shares was powering the US stock market.
CMC’s shares are now at an interesting inflection point once again in the euphoric aftermath of the US election.
Doom watch 1929
To understand the possible investment case for volatile platform shares, it is necessary to delve into a bit of stock market history to give some shape and context to current times.
There is a well-known, possibly apocryphal story of how Joseph P. Kennedy, ruthless patriarch of the Kennedy clan, came to liquidate his entire stock market position in the summer of 1929 just before the Wall Street Crash began. The crash took several years to unfold but began in earnest on 24 October 1929, or ‘Black Thursday’. As recounted by the economist J.K. Galbraith, Joseph Kennedy claimed that a conversation with his shoeshine boy in August that year convinced him that the market was over-heating – the lad was apparently recommending various stocks to his clients whilst shining their shoes.
Whether you believe Kennedy’s account or not, warning signs of an impending crash were available throughout 1929, it was just a case of looking hard enough at declining consumer spending and falling industrial production figures.
There is little suggestion that a drawdown of such magnitude could repeat itself today. But it is still worth asking questinos about the long US boom fuelled by government spending, price inflation and higher consumer spending has a shelf life.
The US stock market and economy has defied any accurate predictions since 2020 and currently seems unassailable within the context of the G7 group of advanced economies. Still, the country’s addiction to deficit spending and its election of a turbulent populist running on a protectionism platform is a departure from more severe previous norms.
In a new world of potential tariff wars, the idea of sudden and unpredictable market slump is not so far-fetched, particularly as most US share price growth is driven by the super-charged profits of a handful of companies.
The volatility that CMC Markets relies upon to outperform during any given quarter could potentially be around the corner, therefore. It still requires a brave contrarian to go directly against the US market, for which CMC, and other platforms, can doubtless provide a suitably esoteric and geared CFD. Owning a CFD is like holding a parcel of risk, but it's not for investors who want adequate compensation in the form of dividends or share buybacks. In contrast, holding CMC’s shares is a calculated statement of intent, but not without its compensation and safety net.
The space to grow
A direct comparison between CMC Markets and a close competitor like Plus500 (PLUS) – which we recently added to our Bearbull Income Portfolio – is also instructive when assessing the stock's potential.
Although Plus500 has been smashing expectations recently, CMC has been growing faster. Over the past five years, for example, CMC has increased revenue at a compound annual rate of 16.4 per cent, compared with Plus500’s 1.6 per cent. This is despite CMC being the more mature company; it was founded in 1989, while Plus500 only came into being in 2008.

CMC Markets' growth has been driven in part by diversification. It caters to a broad range of retail and institutional clients. While active client numbers declined in the six months to September, this was offset by a 60 per cent increase in revenue per active client to £2,984. Management attributed this to a bigger pool of institutional and high-net-worth investors.
It has also expanded geographically with around 30 per cent of operating income coming from the UK, a third from Australia and the rest from countries such as Canada and Singapore. The company’s offshoots offer stockbroking services in Asia Pacific and are important in attracting under-served Asian clients. It has also been expanding in niche markets in territories like New Zealand, where it has signed a deal with ASB Bank to provide the services for an ASB-branded platform.
It has had success in diversifying access to its platform too. For instance, the company recently inked an access agreement with Revolut to provide trading services for its clients, so as Revolut grows in the aftermath of securing key banking licences, then so hopefully will CMC.
At the same time, costs have been kept on a tight leash. The company announced in February that it would cut almost a fifth of its workforce as part of a money saving plan, and operating costs were down 9 per cent at the half-year mark. Operating cost guidance for the whole year remains unchanged at £225mn, excluding variable remuneration and non-recurring charges, and net operating income is expected to meet consensus estimates of £333mn.

The company offers a decent dividend yield of approximately 4.4 per cent for 2025. However, it's important to note that the dividend can fluctuate wildly as profits swing up and down, which may raise questions over the sustainability of future payouts. Still, it is a decent risk payment for investors in the short-term.
While CMC Markets can demonstrate strong financial performance and strategic growth, investors should be aware of the inherent risks in the financial services industry, including regulatory changes. CMC will have to be careful with updated rules governing consumer duty, for instance, having been caught out by tighter regulation in the past – for example, when the European Securities and Markets Authority restricted retail traders’ use of leverage.
It is also worth bearing corporate governance in mind. The platform was founded by Conservative party donor Peter Cruddas, and he still owns roughly 60 per cent of the shares, according to FactSet. Eyebrows have been raised in the past about the size of management payouts – particularly during trading slowdowns.
In summary, CMC Markets presents an interesting play on global market conditions, and trading is currently solid. In the aftermath of the recent interim results, broker Peel Hunt left its estimates largely unchanged, and it forecasts full-year earnings per share and pre-tax profits of £96mn and 25p, respectively.
This gives a forward price/earnings ratio of around 12, which looks decent value considering that the sector average PE is appraoching 14, according to FactSet consensus.
“As always…we remain cognisant of the trading and volatile nature of the group’s revenues”, Peel Hunt says. Retail investors shouldn’t forget this either – but for those willing to harness some volatility, CMC Markets is an interesting option.
Company Details | Name | Mkt Cap | Price | 52-Wk Hi/Lo |
CMC Markets (CMCX) | £737m | 263p | 349p / 94.3p | |
Size/Debt | NAV per share* | Net Cash / Debt(-) | Net Debt / Ebitda | Op Cash/ Ebitda |
145p | £218mn | - | 93% |
Valuation | Fwd PE (+12mths) | Fwd DY (+12mths) | FCF yld (+12mths) | PEG |
11 | 4.3% | 7.3% | 0.4 | |
Quality/ Growth | EBIT Margin | ROCE | 5yr Sales CAGR | 5yr EPS CAGR |
- | 20.6% | 16.4% | 52.4% | |
Forecasts/ Momentum | Fwd EPS grth NTM | Fwd EPS grth STM | 3-mth Mom | 3-mth Fwd EPS change% |
6% | 4% | -16.3% | 4.4% |
Year End 31 Mar | Sales (£mn) | Profit before tax (£mn) | EPS (p) | DPS (p) |
2022 | 326 | 91.5 | 24.5 | 12.4 |
2023 | 311 | 52.6 | 14.6 | 7.40 |
2024 | 325 | 80.0 | 16.7 | 8.30 |
f'cst 2025 | 352 | 89.2 | 23.5 | 11.7 |
f'cst 2026 | 358 | 86.2 | 22.7 | 11.3 |
chg (%) | +2 | -3 | -3 | -3 |
Source: FactSet, adjusted PTP and EPS figures | ||||
NTM = Next Twelve Months | ||||
STM = Second Twelve Months (i.e. one year from now) |