The world of payments has changed so much in the past 50 years that some are predicting a day will come when there will be no cash in the monetary systems, and everything from Bitcoin to electronic wallets will control the way things are bought and sold in the U.S. and around the globe.
A new research report from the business process analysts at Baird makes it clear that while there are plenty of boundaries and headwinds that some of the top payment companies may face, the overall trajectory for the sector looks very positive. Plus, with so many ways to generate revenue, and so many still to come online, the sector can continue to grow.
Here are the top stocks to buy from Baird. They are all rated Outperform.
Cognizant Technology Solutions Corp. (NASDAQ: CTSH) provides information technology (IT), consulting and business process outsourcing services worldwide. The company operates through four segments: Financial Services; Healthcare; Manufacturing, Retail, and Logistics; and Other. It offers consulting and technology services, such as IT strategy, program management, operations improvement, strategy and business consulting services. The Baird analysts feel that the company can deliver above peer group revenue growth despite what may be a sluggish second half of this year.
The Baird price target for Cognizant is $53, and the consensus figure is $51.52. The stock closed trading on Tuesday at $44.77.
Global Payments Inc. (NYSE: GPN) is trading at a premium, but the Baird analysts think the earnings and growth potential justifies the increase. They also sense that the current forward guidance for earnings may be conservative. The company is a leading provider of payment services for merchants, value added resellers, financial institutions, government agencies, multinational corporations and independent sales organizations located throughout North America, Brazil, Europe and the Asia-Pacific region.
Investors are paid a small 0.1% dividend. The Baird price target is $84, and the consensus target is $75.79. Shares closed trading on Tuesday at $69.88.
Net 1 Ueps Technologies Inc. (NASDAQ: UEPS) is a South African-based technology entity encompassing a combination of world-class solutions tailored to the specifically identified needs of the global market. Its diverse product offering is consolidated into five primary business lines: Mobile Banking, MNO Solutions and Prepaid Vending, Third Party Payments, Smart Card Technologies and Cryptograph.
The Baird price target is a big $18, which is the same as the consensus estimate. Shares closed trading on Tuesday at $12.05.
Vantiv Inc. (NYSE: VNTV) is a leading integrated payment processor differentiated by a single, proprietary technology platform. Vantiv offers a comprehensive suite of traditional and innovative payment processing and technology solutions to merchants and financial institutions in the United States of all sizes, enabling them to address their payment processing needs through a single provider. The company combined with Verifone to win the the Banker Technology Project of the Year 2014 award in the Risk Management category for their industry-leading, multilayered approach to reducing cardholder data security risk using end-to-end encryption.
The Baird price target is $38, and the consensus target is lower at $37.50. The stock closed on Tuesday at $30.90 a share.
WNS (Holdings) Ltd. (NYSE: WNS) is a leading global business process management company that offers business value to more than 200 global clients. The company has deep domain expertise in key industry verticals including travel, insurance, banking and financial services, manufacturing, retail and consumer packaged goods, shipping and logistics, health care and utilities.
The Baird price target for this top small cap pick is $24, and the consensus figure is set right in line at $23.90. The shares closed on Tuesday at $22.51.
The dramatic growth trajectory for payment solutions and logistics within the sector should only continue to grow. Some of the smaller Baird stocks may be acquisition targets the bigger players look to expand product silos.