Some investment experts consider combining fundamental factors with technical indicators the holy grail of investing. Well, I have done just that and come up with three stocks that tick each box regarding strong underlying fundamentals and bullish technical strength. These stocks have exhibited hyper revenue growth and are expected to grow earnings significantly next year.
In terms of technical indicators, I want to make sure stocks are in a bullish trend. One technical indicator I like to use is On Balance Volume (OBV). OBV uses volume flow to predict changes in stock price. OBV was developed by Joseph Granville, who believed volume was the main force behind markets and that the indicator would predict market moves based on volume changes.
The other technical indicator I like is MACD, which is the Moving Average Convergence/Divergence. This indicator is a trend-following indicator that shows the relationship between two moving averages of a stock’s price. It is calculated by subtracting the 26 Day Exponential Moving Average (EMA) from the 12 Day average. The signal line is a 9-day EMA of the differential line. A buy signal occurs when the MACD crosses above the signal line.
Global Payments (GPN)
GPN is a leading provider of payment processing and software solutions and focuses on serving small and midsize merchants. The company dominates the payment software, e-commerce, and omnichannel solutions space. GPN finalized its acquisition of Total System Services last year, which gave it broad exposure to the rapidly evolving payments market in more than 100 countries.
The company has also implemented cost-cutting measures to address the impact of COVID on its business. It has made cuts to its general and administrative (B&A) and marketing budgets and made executive pay reductions. These cuts are expected to deliver over $400 million in annualized savings over the next year.
GPN’s operating cash flows have been increasing over the past few years. Its operating cash flow was up 288% year over year in the first half of 2020. This should provide financial flexibility to the company to invest in the business and drive long-term growth. The company grew sales 75.3% last year as of the second quarter. Earnings are expected to grow 25.5% next year, and we should know more as the company reports its latest financial results on October 19th.
In terms of technical strength, GPN is showing a bullish trend in On Balance Volume, short-term MACD, and long term MACD. The stock is rated a “Buy” in our POWR Ratings system. It holds a grade of “A” for Trade Grade and a “B” for Buy & Hold Grade, Peer Grade, and Industry Rank. These are the components that make up the POWR ratings. GPN is also ranked #7 out of 46 stocks in the Consumer Financial Services industry.
NFLX is the pioneer of streaming and is still dominating the industry. The company, which started as a small DVD-rental provider, has spent hand over foot to build out its original content portfolio. The diversity of its content is what sets it apart from its rivals. This includes the production of local foreign-language content that has enabled it to expand its subscriber base into the Asia Pacific.
The company has also invested in providing theatrical exposure to its original movies in the hopes of winning an Oscar, or at the least gaining recognition for its work. This provides a selling point to recruit A-list actors and directors to work on its original programming.
NFLX should see further upside on global subscriber growth as it continues to expand into other international regions. The company has seen its revenue grow an average of 28.5% over the past five eyes and is expected to grow earnings 41.9% next year. The firm reports its results for the most recent quarter on October 10th.
Like GPN, NFLX shows bullish strength in On Balance Volume, short-term MACD, and long-term MACD. The company is rated a “Strong Buy” in our POWR Ratings system. It holds grades of “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. It has a grade of “B” for Industry Rank. The stock is ranked #11 in the Internet industry.
FISV is a leading provider of core processing and complementary services, such as electronic funds transfer, payment processing, and loan processing, for U.S. banks and credit unions. After its merger with First Data last year, the company now provides payment processing services for merchants. The company has a dominant position in the financial and payments solutions space due to its diverse customer base and ongoing technology upgrades.
The company has grown through other acquisitions such as MerchantPro Express, Bypass Mobile, and Inlet. MerchantPro expands FISV’s merchant services business, Bypass expands its omni-commerce capabilities, and Inlet improves its digital bill payment strategy. These acquisitions boost its market share and increase its customer base.
FISV has rewarded investors through share buybacks, which have been made possible with strong growth. Sales grew 87.3% last year, and earnings are expected to grow 22.5% next year. The rapid growth in demand for digital banking and payment services should provide growth for the foreseeable future. FISV reports earnings on October 27th.
The stock is showing bullish strength in short-term and long-term MACD. The stock is rated a “Buy” in our POWR ratings system, with a grade of “A” for Trade Grade and Industry Rank and a “B” for Peer Grade. It is also ranked #35 out of 207 stocks in the Financial Services (Enterprise) industry.
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GPN shares were trading at $174.35 per share on Thursday afternoon, down $2.84 (-1.60%). Year-to-date, GPN has declined -4.18%, versus a 8.96% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...
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