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Global Payments Inc (NYSE:GPN): A Bull Case Theory

We came across a bullish thesis on Global Payments Inc (GPN) on ValueInvestorsClub by beethoven. In this article we will summarize the bulls’ thesis on GPN. Global Payments shares were trading at $95.03 when this thesis was published, vs. closing price of $110.69 on Sep 20.

Global Payments stands out as a key player in the financial technology and payment processing sector providing a wide array of services to companies worldwide. The company makes money through three main areas: Merchant Solutions, Issuer Solutions, and Owned Software. These serve customers in many fields, including retail, healthcare, education, and small business services. This helps it keep its place in established markets while staying up-to-date in newer, tech-driven spaces. The company’s customers come from various industries such as dental, vision, automotive, construction, veterinary, and many other small and medium-sized business markets. These niche areas don’t face as much threat from new-age companies like Adyen or Stripe. This puts Global Payments in a strong position as a vital provider of digital payment services.

See Also 33 Most Important AI Companies You Should Pay Attention To

Despite its strong market position, GPN’s stock has faced difficulties trading at 2017 levels and dropping 20% since its Q1 2024 earnings report. The stock’s decline stems from unmet margin growth goals and poor communication with shareholders by management. GPN’s leaders haven’t kept things open when it comes to cash flow reporting, which has shaken investor trust. The lack of clarity about “adjusted free cash flow” and questionable actions such as not showing key performance slides during presentations, have also played a part in the stock’s poor performance.

Despite this, a strong case exists for purchasing GPN stock. The firm’s stock price sits at historically low levels, with a P/E ratio unseen for 20 years. Its FCF forecasts point to a big comeback once working capital problems clear up. To be exact, GPN’s cash use from settlement processing duties (because of timing gaps) should return to normal after Q2 2024 leading to better FCF. Experts think the company will produce over $10 per share in FCF for 2024 and 2025 bringing its FCF-to-adjusted EPS ratio back to a good range.

GPN’s true worth shines through its strong business areas. The Merchant Solutions part faces tough competition but keeps customers well in North America, and is growing in online sales. The Issuer Solutions part is a world leader and keeps winning more of the market in Europe. Looking at each part shows GPN’s stock could climb to $145 giving a 53% gain, with a 13% chance of dropping to $83. This makes it a good buy at today’s price.

GPN is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 67 hedge fund portfolios held GPN at the end of the second quarter which was 53 in the previous quarter. While we acknowledge the potential of GPN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as GPN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and 10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America.

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

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

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The #1 Lithium Stock to Watch Going into 2025

A Recent Monumental Shift in the Mining Arena has Shined a Big Spotlight on Lithium!

Many eyes are once again locked on the critical mineral since Rio Tinto, the 2nd largest mining company in the world, acquired Arcadium Lithium PLC. The acquisition immediately catapulted Rio Tinto to becoming the world’s 3rd largest lithium producer.

Why would a big mining giant like Rio Tinto be interested in acquiring a lithium producer?

Because they recognize there is a tremendous need for lithium in the world’s energy transition. Rio Tinto CEO Jakob Stausholm said Rio is confident that long-term demand for lithium will be strong.

This is the largest mining deal in the world since 2007 and marks a significant milestone to the lithium industry as it depicts a massive shift in sentiment from the big mining companies.

As the race to find secure lithium supplies continues, an underfollowed lithium explorer is causing quite the commotion as Wall Street learns about the company’s disruptive lithium land package in Brazil!

Why is Brazil Important?

In less than two years, Brazil emerged from ZERO exports to the fifth-largest lithium exporter in 2023 with projections of a fivefold production increase in the next five years! To say that Brazil is undergoing a lithium boom is an understatement!

Lithium exploration is accelerating in Brazil, in the wake of the relaxing of regulations and growing demand for the mineral that’s crucial to the global transition to electric vehicles. The country has relaxed its lithium export regulations, which has attracted global investment and transformed the country into a major producer of the critical element.

Brazil is being noticed for its prolific lithium appeal…

In August 2024, Australian lithium giant Pilbara Minerals announced its plans to acquire Latin Resources for approximately A$559.9m ($371.12m) to diversify its operations.

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