The Western Union Company (WU), Xoom Corp (XOOM): This Stock Will Continue to Dominate Its Market

This gives The Western Union Company (NYSE:WU) a permanent advantage in agent attraction, which then enables the company to grow its customer base more quickly, which continues to feed the cycle.

Bottom line
Xoom Corp (NASDAQ:XOOM) will not encroach on traditional money-transfer businesses because the majority of the latter’s business comes from un-banked migrants. The Western Union Company (NYSE:WU) and Moneygram International Inc (NYSE:MGI) are recession-resistant businesses that benefit from economies of scale and regulatory barriers to entry. However, Western Union’s significant advantage in the size of its agent network gives the company an unassailable lead in the business, relegating MoneyGram to little more than a minor annoyance.

As a result, investors should expect more of the same from The Western Union Company (NYSE:WU) going forward; at 11 times earnings, the company has room for a drop in earnings before investors stop earning an adequate return.

The article This Stock Will Continue to Dominate Its Market originally appeared on Fool.com.

Ted Cooper has no position in any stocks mentioned. The Motley Fool recommends Western Union.

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