Buy Fiserv for Tranquility in a Sea of Volatility (FISV)

Fiserv (FISV) continues to keep its pioneering spirit alive and has a lot going for it in the current market.

Buy Fiserv for Tranquility in a Sea of Volatility (FISV)The company had the first U.S.-based banking software to be certified ISO 9000 (a quality management standard) in 1994. It launched e-bills in 1997. This was years before the dotcom bubble was even on anyone’s radar.

And FISV continues its innovation today. What’s more, the company is secured in a long-term growth sector that will continue to grow as long as there are financial institutions and people that use them.

The one industry that has been treated with kid gloves since the financial crisis — which happened 7 years ago this week — has been financial institutions.

Yes, there have been attempts to put more onerous regulation in place, and regulators continue to unravel the mess that many financial institutions wound up in. But during that time, banks have become increasingly digitized. And their clients have as well.

FISV has been there the entire way, offering new products to help financial institutions become more efficient (read more profitable) as well as help clients control their accounts with more finesse.

We have gone from ATMs and national banking to online and mobile banking in less than two decades, and each iteration has helped FISV grow. Just the fact that FISV is embedded in it clients’ systems means it’s extremely expensive and time consuming to switch to another service provider. A high barrier to entry is even better when its complimented by high barrier to exit.

Granted, this isn’t you’re typical highflying tech stock. This is a solid long-term growth stock. Don’t get me wrong, it’s up 34% in the past year, so it has its moments. But the real reason to buy it isn’t with expectation of the stock going parabolic.

Two of the big attractions to the stock at this point are as a play on the recovering U.S. economy and for its position into the well-protected financial sector.

It’s a tech stock that doesn’t rely on consumer fads or large amounts of capex spending. It exists to allow banks to optimize how they manage their accounts and allow clients to stay on top of their accounts like never before.

Its large clients are household names like insurer Nationwide, brokerage firm Raymond James (RJF), credit card firm Synchrony (SYF) and top regional banks like Washington Federal (WAFD) and Bank of the Ozarks (OZRK). FISV also just signed up another top 40 bank in the past month.

And as the economy recovers, the more use Fiserv’s payment solutions will get. Also, as technologies continue to change, so will the solutions the company will offer. That means more product sales for FISV.

Its strategic positioning in the financial sector also helps it weather the market bruising levied on firms that are more consumer dependent, or more discretionary from a corporate perspective.

As for the financials, it is very encouraging that FISV continues to deliver ever-increasing margin growth. Quarter after quarter, expanding margins is a very good sign the company is growing in a smart, sustainable way.

After a brief dip in the big August correction, FISV is almost back to its 52-week highs. That’s another signal that investors see a lot of value in FISV, even at these levels.

While FISV is also in 80 countries with more than 800 clients, at this point its international exposure only accounts for 6% of revenue. But that means, as recovery gains momentum beyond U.S. shores, FISV can count on being a part of that growth as well.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.

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