Seeking Alpha: Global Payments' Transformation Continues

Merchant acquiring isn't the most exciting business - truth be told, the entire acquiring / network / interchange system is probably boring to most people - but Global Payments (GPN) has a lot of interesting drivers working right now. The company's transition away from ISOs and toward direct acquisition should be good for margins over time, and the company has an uncommonly strong position outside the U.S. With the company also embracing integrated payments, higher revenues and margins should also be in play down the line.

Global Payments' efforts haven't gone unnoticed. Since I last wrote, the shares are up about 20% on increasing bullishness over the company's efforts to expand into integrated offerings and speculation that the company's overseas position could make it an M&A target. These shares don't seem mispriced in the market right now, but could still generate a good high single digit to low double-digit annual return from here.

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Global Payments' Transformation Continues

Seeking Alpha: After The Panic And Rally, Green Dot Still Has Plenty To Prove

Watching Green Dot (GDOT) from the cheap seats (ie, not as an actual shareholder) has been an interesting experience, as the market has moved through a pretty predictable cycle of excessive risk-blind optimism, near-blind panic, and relief. While that all has been going on, the market for prepaid debit cards has continued to develop and mature but still seems to be largely unpenetrated. At the same time, Green Dot has been rolling a range of services and distribution points that should give it a leg up in maintaining its position as the market leader.

At this point, I think Green Dot is in sight of fair value, but I'll be the first to acknowledge that there is a bigger than average range of potential outcomes here. I'm expecting Green Dot to generate mid-to-high single digit revenue and free cash flow growth, but the opportunity is larger than those numbers suggest and Green Dot could elbow out its competition. I could also see this company appealing to a range of companies in the payment foodchain, any one of which could use the fee income and customer base that Green Dot can offer.

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After The Panic And Rally, Green Dot Still Has Plenty To Prove

Seeking Alpha: Heartland Payment's New Ventures Make Sense, But Mind The Multiples

With the markets up as much as they are over the past two years, it's not so surprising that there are a lot of stories out there along the lines of "it's a good company and they have a good plan, but be careful about the valuation".

Payment processing service provider Heartland Payments (HPY) definitely fits that description for me. I believe the company's direct sales force and uncommon transparency give it an edge in the processing space. Likewise, I believe the company's forays into newer businesses like payroll and education-related processing can generate worthwhile returns. I just question whether there's a lot of loose change left in the couch for a stock that is up more than 100% over the past two years and trading a little rich relative to its growth.

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Heartland Payment's New Ventures Make Sense, But Mind The Multiples