We recently compiled a list of the 10 Best Monopoly Stocks to Buy. In this article, we are going to take a look at where Intercontinental Exchange, Inc. (NYSE:ICE) stands against the other monopoly stocks.

Morgan Stanley believes the bull market might not be finished, and the S&P 500 might close the year with single-digit gains. There can be further declines in the S&P 500, which can result in attractive entry points. Historically, when stocks decline 15%, the average returns after a year tend to be attractive, says Morgan Stanley. Furthermore, the returns are even more attractive when a 20% drop becomes an entry point. That being said, a major risk to the broader equity market can be a resurgence of inflation and the US Fed increasing rates, along with tariff impacts.

S&P 500 Can Deliver Single-Digit Returns

Morgan Stanley Investment Management’s Applied Equity Team believes that 2025 can be a “pause” year for the broader S&P 500, posting single-digit gains. This remains consistent with the firm’s outlook, which was shared at the beginning of the year, suggesting that 3^rd year of a bull market tends to deliver mediocre—but positive returns, together with increased volatility. Analyzing 12 times since 1950 that the broader S&P 500 declined a minimum of 20% from its peak, there was a recession in 9 of such instances, says the investment firm. In the current instance, the combination of the market decline or the recession talk appeared to be sufficient to spur a policy response.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

Pockets of Opportunities

Morgan Stanley believes that stocks can retest lows seen in early April. The base case outlook is for gains in 2025, and the market is open 251 days a year. If stocks decline 20% or more, the investment firm opines that investors will do well to consider increasing the equity allocations more aggressively. In the 12 times since 1950 in which the S&P 500 fell 20%, the average subsequent 1-year return with that fall as an entry point is 19%. Fidelity International believes that, in this market, which is characterised by increased uncertainty, a focus on dividends as a component of total return can offer support.

Furthermore, the firm believes that it is critical to combine an emphasis on high-quality businesses with valuation discipline in a bid to avoid overpaying for companies and have a better chance of generating strong long-term returns. In difficult market environments, earnings resilience remains critical. This doesn’t mean a top-down allocation to defensive industries, but selecting companies possessing resilient business models throughout a broad range of sectors with the help of detailed bottom-up analysis. Owning resilient businesses, diversified across industries, leads to increased earnings persistence as compared to the broader market indices, says Fidelity International.

Our Methodology

To list the 10 Best Monopoly Stocks to Buy, we scanned through monopoly ETFs and several online rankings. After getting an extensive list, we chose the ones that were the most popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiment, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Intercontinental Exchange, Inc. (NYSE:ICE)

Number of Hedge Fund Holders: 91

Intercontinental Exchange, Inc. (NYSE:ICE) offers technology and data to financial institutions, corporations, and government entities. The company’s significant market power and dominance in areas of the financial and commodity markets continue to bolster its market standing. Its dominance stems from the acquisitions of other exchanges and its operation of critical exchanges and clearing houses.  Intercontinental Exchange, Inc. (NYSE:ICE) announced that it has acquired American Financial Exchange (AFX), which is an electronic exchange for direct lending and borrowing for American banks and financial institutions. It has acquired 100% of AFX from 7RIDGE.

Morgan Stanley analyst Michael Cyprys upped Intercontinental Exchange, Inc. (NYSE:ICE)’s price objective to $181 from $178, keeping an “Equal Weight” rating. In a difficult macro backdrop with a greater need to hedge risks, the firm expects upside to exchanges’ volumes, primarily rates, credit, and index options. Furthermore, the exchanges act as a defensive safe haven during uncertainties due to the greater need by market participants to manage and hedge risks, opines Cyprys. For FY 2025, Intercontinental Exchange, Inc. (NYSE:ICE) expects mid-single digits fixed income & data services recurring growth.

Aristotle Atlantic Partners, LLC, an investment advisor, released its Q1 2025 investor letter. Here is what the fund said:

“Intercontinental Exchange, Inc. (NYSE:ICE) was a relative contributor in the first quarter following a solid fourth quarter earnings report highlighted by continued strong trading activity in energy and interest rate products, additional efficiency gains, and positive commentary about the Mortgage Technology business. In addition, optimism improved following the company’s annual ICE Experience conference, which highlighted new AI solutions in its Mortgage Technology product suite. The company’s AI efforts in Mortgage Technology are accelerating progress toward improving and digitizing workflows and positioning it to gain an increasing share of the long-term market opportunity in the mortgage industry.”

Overall ICE ranks 7th on our list of the monopoly stocks to buy. While we acknowledge the potential of ICE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than ICE but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.