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Richard Tarjeft
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entrepreneur, investor, future hedge fund manager.
  • Get Paid Buying Global Payments (GPN) 0 comments
    Apr 3, 2013 7:45 PM | about stocks: AXP, MA, NTSP, ULTA, V, GPN

    Today was another sell day for the street. As part of my daily routine I scanned the board looking for anything of interest. I found what I believe is a gem of a trade. Global Payments, Inc. (NYSE:GPN) is now trading at a substantial discount compared to recent trading levels and I think the fundamentals make it an immediate buy. Here is why:

    Global Payments just reported impressive, recurring earnings of .87 per-share for the quarter versus the .88 per-share analyst were expecting. The near miss resulted in an almost 10% sell off in the stock. Creating an immediate opportunity for buyers.

    About Global Payments: Global Payments Inc. is a provider of electronic payments transaction processing services for consumers, merchants, independent sales organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, the United Kingdom, Spain, the Asia-Pacific region, the Czech Republic, and the Russian Federation. The Company serves as an intermediary to facilitate electronic payment transactions and operates in two business segments: North America Merchant Services and International Merchant Services. On December 5, 2011, the Company acquired the merchant acquiring business of Alfa-Bank. On December 30, 2011, the Company acquired a merchant acquiring business in Malta from HSBC Malta. On January 31, 2012, it acquired the United States merchant portfolio of CyberSource from Visa.

    The Positives: Global reported quarterly revenue of $578.7 million representing an 8% increase over the same quarter in the previous year. They also drastically improved on cash flow. Swinging from a loss of $226.8 million last year to a gain of $204.8 million for the same quarter this time around. Their cash and equivalent positions are standing at $682.96 million and their guidance was reaffirmed at 2.36 - 2.4 Billion in revenue and $3.64 to $3.71 per share in earnings.

    This marks a very low forward price-to-earnings ratio of 12.2 for versus the relatively nominal and high price to earnings ratio found amongst the peer group:

    MasterCard (NYSE:MA) trades at price-to-earnings of 24.3

    Visa (NYSE:V) trades at price-to-earnings of 75.34

    NetSpend (NASDAQ:NTSP) trades at price-to-earnings of 68.43

    American Express (NYSE:AXP) trades at price-to-earnings of 17.11

    There are countless other examples in the consumer financial services category but they all point to the same conclusion. is cheap!

    The Technicals:

    (click to enlarge)

    Both the 20 and 100 day moving average on Global Payments would indicate the stock was over sold today. The 20 day sits at $48.12 and the 100 at $46.89.. Either scenario or some place in between would indicate very nice upside for Global payments Inc.

    Although today GPN traded over 5.4 million shares normal volume is under 800 thousand per day. A short report shows that the current short interest stands at almost 2.7 million shares. Meaning on normal volume it would take almost 4 days of covering to close. This could cause a mid level short squeeze from people looking to cover into the temporary slump.

    Institutional Ownership:

    Global Payments has massive institutional ownership. With only about 2% of the 78.72 million shares being held in small hands. That means a tiny 1.574 million that are not owned by the big boys.

    With such a strong hold it would not be unreasonable to expect more accumulation from institutions and the possibility for upgrades from some of the same. Heavy institutional ownership has been a very bullish indicator following an over-reaction on the sell side for many of the stocks I follow. (NASDAQ:ULTA) Just last month fell on a similar near miss and has recovered very nicely in just 3 short weeks. My coverage of which can be seen here. That stock is still trending higher as institutions pick up the cheap shares.

    I think the same could happen with , only faster, because it is a sector that is more bullet-proof and the level of institutional ownership is even heavier.

    In conclusion I am very bullish on Global Payments and think it will make a nice win for anyone who takes fast advantage of the situation.

    Disclosure: I am long GPN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Stocks: AXP, MA, NTSP, ULTA, V, GPN
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  • $NTES looks for a beat after-hours today!
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    Apr 8, 2013
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