We came across a bullish thesis on International Money Express (IMXI) on ValueInvestorsClub by HighLine09. In this article we will summarize the bulls’ thesis on IMXI. International Money Express shares were trading at $21.31 when this thesis was published, vs. closing price of $18.32 as of Sept 9.
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International Money Express also known as Intermex is a leading global remittance operator, facilitates money transfers primarily from the US and Canada to 20 Latin American countries, eight African countries, the Philippines, and Vietnam. With over 4.5 million customers and a vast network of over 100,000 retail locations, mostly in community-owned stores, Intermex has established itself as a dominant player in the remittance market. The company’s primary remittance corridor is the US to Latin America, with Mexico accounting for 67% of its overall revenues.
The current share price of Intermex does not fully capture the potential of its expanding business model. Leveraging its extensive North American agent network, a growing digital platform, and the recent acquisition of La Nacional, the company is well-positioned to outpace the industry’s 9% annual growth target. The share repurchase program further underscores management’s confidence in future earnings growth.
Global remittances reached an estimated $860 billion in 2023 and are expected to grow to $1.5 trillion by 2030. Intermex’s revenue model involves charging transaction fees and foreign exchange spreads. While the majority of its transactions occur in person, reflecting the cash-based income of its customers, Intermex’s digital platform is expanding. Despite high technology adoption among its younger customer base, only 30% of transactions are digital, reflecting a slower shift toward online transfers. However, the digital segment is the fastest-growing part of its business and is expected to contribute significantly to future growth.
Over the past four years, Intermex has increased revenue and net income by 20% and 30% annually, respectively. However, recent earnings have been affected by inflation, a strong Mexican Peso, competitor discounting, and costs associated with integrating La Nacional. Despite these headwinds, the company is confident in a recovery, particularly in the Latin American corridor. The acquisition of La Nacional strengthens its position in the Dominican Republic and provides a foothold in Europe.
Intermex has also repurchased $90 million of its shares in the past 15 months, with plans to continue if the share price remains undervalued. This strategy, combined with an expected recovery in remittance volumes, positions the company to achieve over 18% annual earnings per share growth over the next three years. With a potential share price of over $45, Intermex presents a compelling investment opportunity with a significant upside as it leverages its strong market position and expanding digital capabilities to capture growth in the global remittance market.
International Money Express is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held IMXI at the end of the second quarter which was 23 in the previous quarter. While we acknowledge the potential of IMXI 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 IMXI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.