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An Online Payments Play With Big Opportunity … And It’s Not Amazon!

Blackhawk Network Holdings -- a small play on a burgeoning e-commerce trend


Is (AMZN) really about to unveil a 3D smartphone? The company has scheduled a launch event for next Wednesday — much like Apple (AAPL) does with its new products — and rumors are flying that Amazon will jump into the smartphone market with what would be a very big splash.

Blackhawk Network Holdings HAWK stockI don’t have any inside information as to whether that will happen, but I do know that lost in all the hype over a possible 3D phone is another recent Amazon launch that is just as important, if not more so.

Amazon Payments, which kicked off this past Monday, allows consumers to use stored credit card information to pay for other services, including recurring payments like phone bills, subscriptions, and so on. AMZN is clearly making a move here to become more entrenched as a middleman for payment transactions.

I must say, I like the sound of this.

It makes perfect sense for AMZN to expand its reach even further into the e-commerce and online payment world, appealing to those who might not like the idea of handing out their personal information to unknown or unfamiliar online companies. This also is an appealing move for anyone who owns Amazon stock, as 40% of sales are now done through third-party sellers.

Interesting, But…

It’s not the first time we’ve seen this move. Amazon Payments will jump directly into competition with eBay’s (EBAY) payment service, PayPal. Now it’s AMZN’s 240 million customers vs. PayPal’s 148 million active accounts.

I have been a fan of PayPal’s for years. Back in 2012, I recommended eBay in my GameChangers service, and I said at the time that eBay was a game-changer for mainly one reason: PayPal. In 2011, PayPal contributed 38% of eBay’s total revenues, and in 2013, it contributed 41%. We bought EBAY in April 2012 and cashed in a year later for 42% profits.

I love spotting an opportunity when it’s first blossoming and being able to ride it for nice gains, so of course, Amazon’s efforts recently sparked my interest.

So what does this new venture mean? I can tell you one thing: AMZN is definitely headed in the right direction, and I am going to keep a close eye on it in the coming months. If a game-changing 3D smartphone really is announced next week, you can bet it will make use of Amazon Payments’ services and technology.

Still, it’s too early to rush out and buy the stock, which is actually down 15% so far in 2014.

In the meantime, though, I want to be in that mobile/online payment space, and I’ve been recommending another electronic payment company that I really like right now.

A Lesser-Known Electronic Payments Play

Blackhawk Network Holdings (HAWK) is still unknown to many investors, having just gone public a little more than a year ago (April 2013). HAWK is a prepaid payment network, offering merchandise and dining gift cards, rechargeable and one-time-use gift cards, telecom prepaid cards, prepaid wireless devices, and more.

With distribution reaching over 180,000 locations, 21 countries (Canada being the most recent venture) and four continents, it’s safe to call Blackhawk a globally appreciated company. I like HAWK’s potential going forward, especially in the coming months as we continue through the gift-giving graduation season then head into the back-to-school shopping season in the fall.

Slowly but surely, cash is becoming a thing of the past, and trusted companies are in good position to benefit from the shift to electronic payments. Cashless business models are becoming ever more present, and it’s increasingly common to go through a third party when purchasing products online.

Whether you choose to use prepaid gift cards, PayPal or the new Amazon Payments, you’re choosing to trust a household name with your credit information rather than a small company you might never have heard of before.

I believe good things are to come with certain companies at the forefront of this trend. Amazon may well be one of those, and I’m going to keep a close watch on it this summer.

For now, I’m glad we’ve pounced on HAWK, for which I’m targeting 25%-plus returns from where we first recommended it.

Hilary Kramer is the editor of three financial advisory services designed to help individual investors profit from her stock picking talents — Hilary Kramer’s GameChangers, Breakout Stocks Under $10 and High Octane Trader.

Article printed from InvestorPlace Media,

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