Thrive in a cashless world

This is a fast changing world with mind-boggling innovations brought up everyday. There are many new trends which are going to dominate our life in the future. One of them is a cashless world. For many years, cash has become less and less used in our daily life due to ever increasing usage of credit cards, debit cards and other traditional electronic banking. Now with lightening speed of expansion of the mobile world, the new ways of electronic payment like ApplePay, AliPay, Google Wallet just accelerate the death of cash. Maybe in the foreseeable future, cash will indeed become obsolete and disappear from people's wallet. There are certainly many company which will thrive in this cashless world. But one company is showing its particular strength. I'm talking about Global Payment Inc (GPN).

Global Payments provides payment solutions for credit cards, debit cards, electronic payments, and check-related services. It operates in two segments, North America Merchant Services and International Merchant Services. It processes billions of checks, payment cards, and e-commerce transactions annually for more than 1.5 million merchant locations around the world. Apparently GPN is not in competition with but rather work with various card-issuing and electronic payment companies by providing innovative software-supporting and processing solutions. Now with the mobile life dominating the world, GPN is not simply sitting and watching but is also actively participating in this mega trend. Below are just the 2 examples as described by GPN:  

Mobile Payment and Back-Office ManagementWith Global Payments' mobile solutions, you can turn your mobile device into a powerful payment system from point-of-sale to inventory management. Accept cash or credit. Scan barcodes. Manage inventory. Email receipts. And have real-time reporting – wherever you are.

Apple Pay
Apple Pay™ - A terrific milestone for the future of the payment industry. Apple Pay is transforming mobile payments with an easy, secure and private way to pay. Global Payments brings secure and innovative commerce to merchants, partners and consumers with the addition of Apple Pay.
By offering Apple Pay merchants can provide their customers an easier, convenient check out experience.

Its healthy and growing business has certainly been reflected in its financial data, mainly revenue growth higher than the industry average of 21.5% with strong earnings growth of 37.5%. Its recent reported net income growth came in significantly exceeded that of the S&P 500 and the IT Services industry (by 26.6% one year same quarter comparison). As such, its net operating cash flow has sharply increased by 165%. Its strong business can also be demonstrated in its long-term stock price trend. Below is its 5 year share price chart. As you may notice, it had been in sideways for years prior to 2013 and its share price has strongly moved up since 2013, roughly coincident with the start of the major change in our shopping behaviors by using more and more mobile payments. The long-term stock trend can hardly cheat people. If its business model were obsolete and could not be integrated into the most powerful trend of the cashless mobile world, you cannot expect its share prices could have consistently moved up over time. That's the main reason why I really think this is a stock that has a great future as long as it can continue with its momentum. The key question is whether it is a good buy now? I don't think so. Actually I think it is quite overbought at the moment at about $130 and there is a great chance it will correct by 5-10% near term. I'm targeting it to correct to around $120 to find its base for the next leg up. If you want to ride the cashless world, then GPN is one of the stocks you may bet on.