NASDAQ OMX Group, Inc. (NDAQ) and Moody’s Corporation (MCO) Are a Buy for the Next Five Years

Governments (local, state, federal) may demand even more ratings on bond offerings in order to better balance their budgets. After all, it’s always smart to borrow when interest rates are historically cheap. The Federal Reserve recently had a bit of a hawkish stance on its open market policy by mentioning that both rate increases and tapering of quantitative easing are likely by 2015.

Over the long term, I believe countries in emerging market economies will expand their borrowing as public projects are very important. In the end, roads needs to be built, floodgates need funding, and schools have to be in session.

How this impacts other companies

I don’t think the company will be able to attract quarter-over-quarter gains in the total assets under management. Seasonally, fund inflows are up the most in the first quarter of the year. Analysts currently anticipate that Goldman Sachs Group Inc (NYSE:GS) will grow earnings by 5.5% per year over the next five years. I think that growth rates will be closer to 9% over the next five-years based on historical performance, and the sector average.

Conclusion

I really like NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) because the company seems to have a high quality business and has been introducing other businesses to sustain growth. Moody’s Corporation (NYSE:MCO) seems well-positioned especially because its debt ratings are taken seriously even outside of the United States. Goldman Sachs should be able to sustain reasonable rates of growth as long as the stock market continues to trend higher. I think that all three companies will be able to outperform the S&P 500 (INDEXSP:.INX).

The article Nasdaq and Moody’s Are a Buy for the Next Five Years originally appeared on Fool.com and is written by Alexander Cho.

Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs and Moody’s. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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