7. Corpay, Inc. (NYSE:CPAY)
Third Point’s Stake Value: $200,551,000
Number of Hedge Fund Holders: 32
This fintech stock has also caught the attention of Dan Loeb and was a new addition to Third Point’s portfolio in the first quarter. Corpay, Inc. (NYSE:CPAY) is a payment services company that serves both consumers and businesses. It offers vehicle payment solutions, corporate payment solutions, and lodging payment solutions, among other products. It also facilitates cross-border payments. Corpay, Inc. (NYSE:CPAY) rebranded itself in March 2024 and changed its name from FLEETCOR Technologies, Inc., to better reflect its corporate payments portfolio, a major driver for its top-line. Corpay, Inc. (NYSE:CPAY) is one of Dan Loeb’s top growth stocks picks.
Corpay, Inc. (NYSE:CPAY) serves over 800,000 business across the globe and is the number 1 B2B commercial Mastercard issuer in North America. The company is a frontrunner in a niche yet high-growth industry (B2B payments). CPAY’s multiple revenue streams and diversified business model have allowed it to drive growth over the years. The company knows where to invest and has been focusing on wheelhouse deals. In March, it closed a majority investment in Brazilian vehicle payments company Zapay and has the right to fully acquire it over four years. In May, the company signed agreements to acquire Paymerang, an invoice and payment automation platform operator that operates in newer markets, including healthcare and manufacturing, that CPAY already doesn’t have a presence in.
In addition to the company’s strong history of successful deals, it has managed to drive organic growth through high retention rates. Its retention rate in Q1 2024 was logged at 91%. Over the past 10 years, Corpay, Inc. (NYSE:CPAY) has grown its revenue by 14.8% and net income by 13%. In fiscal 2023, it logged a 9.7% year-over-year increase and reported a revenue of $3.75 billion. For 2024 management expects total revenues to range within $3.96 billion and $4.04 billion, and analysts’ estimates sit at $4.01 billion. If CPAY beats analysts’ estimates, that would mean it grew its revenue by about 7%.
So you’ve got a company with consistent double-digit or high single-digit growth, is working on cementing its position in its specialized market, and is going to benefit from the digitization of business payments. If CPAY continues to grow at double digit rates in the future, it may be an idea worth exploring as the stock is currently trading at 13.6 times its forward earnings, lower than its 5-year average P/E ratio of 23x. The stock has gained 10% over the past year and analysts’ median consensus price targets point to a 26% upside from current levels.
