Could a US listing drive this successful Fintech higher?
Stock summary: Deep-value, strong growth and large pay-outs
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If you've read a lot that I've written in the past, then you'll know that I don't encourage short-term speculation or trading. In fact, I equate it to little more than gambling. Trying to second-guess short-term price moves is largely a mugs' game.
My strong preference is to buy stocks of good companies, with strong balance sheets, and the cheaper the better. Then it's just a matter of applying patience, as the companies grow their profits over time, they distribute cash to shareholders in the form of dividends or stock buybacks, and perhaps the shares re-rate to higher market valuation multiples.
This investment strategy serves me well, being based on fundamental analysis rather than short-term market sentiment, and given that I have plenty of patience when it comes to investing. After all, successful investing is a multi-year marathon, not a quick sprint.
That said, there are a lot of people drawn to short-term trading in securities markets. They believe that they can outwit professional traders at investment banks and hedge funds, or computerised trading algorithms that trade in milliseconds. This is often by using price chart formations, known as "technical analysis", or by trying to react quickly to the latest news. (A slightly derogatory alternative term for technical analysts is "chartists".)
Of course, a few people may have a real talent, and lots of time, to dedicate to such things. Frequent trading is time intensive.
Others may have a multi-year run of luck that makes them think that they've cracked the system. But, in reality, the vast majority of private investors that try short-term speculation are likely to have poor results.
Irrespective of whether short-term trading is advisable, it's a perfectly legal activity. In fact, I'm a strong supporter of it being so. After all, who am I to say what other people choose to do with their money? I can only offer opinions on how they are most likely to profit in the long run, or minimise the risks of substantial losses. But others have different views.
Given that there are plenty of speculators, clearly someone has to provide the services that allow them to make their trades. In this report I'll provide a summary of a successful and expanding company that does just that.
What's more, I believe the shares are very cheap currently (with a mid-single-digit price-to-earnings ratio), which leaves plenty of future price upside potential. In the meantime, on top of the general business growth trajectory, the company distributes very substantial amounts of cash each year, both in the form of dividends and stock buybacks.
This powerful combination of factors is what I believe makes the shares interesting. In fact, such combinations are relatively few and far between. You just don't find them very often.
Attractive looking stocks are usually a case of a reasonable price combined with decent growth and dividends. Or very high growth at a reasonable price, but no dividends. Or low growth, but very deep value and a high dividend yield.
It's just rare to get strong growth prospects, high cash distributions and deep value all at the same time.
About a decade ago I found the stock of a company that was a pension administrator in Chile. It was very cheap, growing strongly, and paid a fat dividend. That fit the bill perfectly until it was bought by an American life insurance giant.
But now I've found another one, which I'll tell you about today. Of course, as with all stocks, there's no guarantee that it will turn out well, even for patient shareholders.
But I believe the combination of return factors is a powerful one. That's assuming, say, a five year investment horizon. No one can guess where a share price might go in the short term.
However, even with that being the case, there's a possible short-term catalyst that could drive the price higher. So let's get into it.
An expanding "Fintech" providing services for market speculators