Buy Global Payments for Its Undervaluation and Growth Catalyst

3 months ago

Whitney Tilson

"Sure. This is one I haven't written about before, but it's called global payments. GPN is the ticker. And if you think of the whole world of anytime you use your credit card, there's a whole series of, you know, you have Visa and Mastercard. But then there's also another category called merchant acquirers that take a very small piece of billions of transactions. Global Payments, if you look at its earnings, profits, its free cash flows over the last 20 years, it's just gone up and up and up. In this case, the stock was a great growth stock tracking earnings, but over the last four years the stock's gotten cut by more than 50% while the business has continued to grow. It used to trade at 19 times forward earnings and is right now trading at 6.4 times next year's earnings. Once the World Pay acquisition closes early next year and the fundamentals re-rate, the stock should triple just on the multiple, plus earnings growth on top of that."

Presents Global Payments (GPN) as a compelling buy on the basis of its dramatic undervaluation relative to historical multiples, bolstered by a strategic acquisition that positions it as the market leader in merchant acquiring.

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