Stocks are firmly amid a bull market, which began in October 2022 and was confirmed earlier this year as the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite reached all-time highs.
While stocks have risen significantly over the past year, investors still have long-term opportunities in high-quality growth stocks today. Three stocks you can scoop up today for under $1,000 are Tradeweb Markets (TW 2.01%), Interactive Brokers (IBKR 0.73%), and Kinsale Capital (KNSL -1.69%).
Tradeweb Markets keeps taking market share
When the professionals on Wall Street look to buy or sell U.S. Treasuries, stocks, derivatives, or other financial assets, many turn to Tradeweb's platform.
Founded nearly three decades ago, Tradeweb brought U.S. Treasury trading into the modern technological age. It has since expanded into a wide range of other products, including corporate debt, mortgage-backed securities, and swaps, to name a few.
What makes the company a compelling growth stock is its growing market share in an industry where trillions of dollars in assets are exchanged daily. Over the last few years, Tradeweb has made strategic acquisitions to expand its platform and become more efficient, helping clients lower trading costs while delicately protecting their information so others don't front-run their orders.
Another key part of its growth is its partnerships with major companies on Wall Street. For example, last year, Tradeweb partnered with BlackRock's Aladdin technology to bring its credit trading products to Aladdin's execution management system. This partnership will provide investors with better tools and execution, and help Tradeweb strengthen the network effects around its business.
The proof is in the pudding. Since 2018, Tradeweb's share of the U.S. Treasury market has gone from 11.6% to 22.1%. Not only that, but the company has further room for growth. About 60% of U.S. Treasury trading is electronic. But that still leaves 40% of trades taking place over the phone, giving Tradeweb an excellent opportunity to grab more market share.
The company has also seen excellent growth across other products. For example, its U.S. Investment Grade market share has grown from 13% in 2019 to 26.2% this year. Growth across other assets, including money markets and other credit products, has outpaced those markets' average daily volume growth for several years.
Image source: Tradeweb Markets.
Tradeweb provides a high-quality experience for its professional Wall Street clients, which is apparent when you see its growing market share. The company is also well positioned to benefit from growing government and corporate debt, ultimately leading to more trading volume through its platform.
Interactive Brokers' highly automated business has high margins
Interactive Brokers also offers a trading platform, but its platform caters more toward retail, tech-savvy investors. The company has done an excellent job attracting customers to its platform thanks to its low commissions and high interest rates offered on customers' uninvested cash.
Interactive Brokers is committed to automating as much of its business as possible, which is why most of its senior managers have a background in software engineering. This commitment has paid off. Since 2017, its cleared customer accounts have gone from 483,000 to 2.75 million, a 469% increase in just over six years.
Automating its platform also comes with another benefit: big profit margins. In the first quarter, Interactive Brokers' adjusted pre-tax profit margin was a stellar 71%. The company has historically reported stellar margins, driving stellar net income growth for several years.
Interactive Brokers' strong growth continued in the first quarter, as net income jumped 17% thanks to higher trading volume, higher interest rates, and increased customer margin loans. The company should continue to benefit from active equity and option markets, making it a solid addition to your portfolio today.
Kinsale Capital is one of the best at underwriting unique insurance policies
Kinsale Capital is a fast-growing company in the specialty insurance space. Unlike traditional insurers, Kinsale writes policies covering risks that many insurers won't touch. It operates in the excess and surplus (E&S) insurance market, which can be highly profitable for companies with a deep knowledge and experience underwriting unique risks.
The company has proven it is one of the best at underwriting these policies, as evidenced by its industry-beating combined ratio. The combined ratio is a key measure in insurance which shows how profitable an insurer's policies are after accounting for losses and underwriting expenses. Since 2016, the company's combined ratio is 81%, or 19% better than the industry average, which is around 100%.
Not only does the company display disciplined underwriting, but it has done so while growing at a staggering pace. Since 2019, the company's written premiums have grown from $390 million to $1.6 billion, or nearly 42% compounded annually.
The stock dropped following its first-quarter earnings, partly due to lower growth expectations. CEO Michael Kehoe told investors that the company's longer-term growth rate would be around 10% to 20% per year.
Although it may not continue to grow at 40% annually, Kinsale Capital is a stellar insurer that has proven itself as a high-quality underwriter. The recent dip in the stock, which is down 30% from its 52-week high, provides an excellent entry point for long-term investors today.
