IG Group Share Price Forecast January 2022 – Time to Buy IGG?

Shares of UK-based online trading provider IG Group (LSE: IGG) are in the red today, after closing at 813p. IG group making strides in the stockbroking market by expanding both here in the UK and in its international markets.

IG Group – Technical Analysis

IG Group’s financial statement indicates that the market cap of the company is at £3.502 billion with total assets worth £1.728 billion. Revenue for 2020 was at £872.80 million with a profit margin of 42.61% compared to £665.10 million.

Moving averages such as Exponential Moving Average (10)(804.2),  Simple Moving Average (10)(801.6), Exponential Moving Average (20)(796.8), Simple Moving Average (20)(793.2) and Exponential Moving Average (30)(794.5)  are indicating a buy action. On the other hand, the majority of oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(90.3), Williams Percent Range (14)(−44.2), Bull Bear Power(49.9) and Ultimate Oscillator (7, 14, 28)(46.1) are neutral.

68% of all retail investor accounts lose money when trading CFDs with this provider.

 

Recent Development

IG Group Holdings returned to the spread betting business in April 2005 after being bought up by private equity firm CVC Capital for just £143 million. IG Group provides spread betting and other services such as CFDs and FX trading. Spread betting allows retail investors to bet on whether a stock will go up or down, without actually having to buy the stock, allowing investors to make large profits with only a small deposit.

OG Group has been growing its retail client base in recent years. Interest from the stock market has increased since the start of the pandemic from the retail segment, allowing IG to open more accounts. The company posted strong profits before tax of £450.3m in fiscal 2021, thanks to more accounts open and high volatility due to the pandemic.

Several research firms have weighed in on IGG, with Barclays reaffirming an “overweight” rating. Shore Capital reissued a “buy” rating on shares of IG Group, in a report on Wednesday, December 1st while Peel Hunt restated an “add” rating. Finally, Liberum Capital restated a “hold” rating in a research report on Friday, November 26th. It has been recently revealed that insider Charlie Rozes had purchased 2,000 shares of the business’s stock in a transaction on Friday, October 1st.

Should You Buy IGG Shares?

There are several reasons for investors to believe that IG is a stock to buy and hold for the long term. IG will continue to generate revenue due to the trend of higher retail participation in markets, and high engagement, particularly for the younger age bracket. IG has also branched out to other wealth options in recent years, such as smart portfolios, ISAs and other lower-risk trading products. This helps users to become ‘stickier’ if they can have more funds in one place. The company’s income payment is also encouraging. With a dividend yield at 5.39% there is no reason to suggest that it will not perform well going forward.

However, there are certain risks involved.  As spread betting is classified as gambling in the UK, IG has cut products as a pre-emptive measure, fearing tighter regulations. It has previously removed binary options trading in 2017 due to new regulations. If rules tighten around gambling, it could be disastrous for IG Group.

Another major risk for IG is that it is dependant heavily on volatile markets. There’s little opportunity for traders to make money from buying or selling if stocks and currencies trade in tight ranges.  This is a risk that IG Group cannot do anything about. However, the shares are still worth picking up for the next year.

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