$18.35
0.31 (+1.72%)
CyberSource Corp (CYBS)
CAPS Rating:
The Company provides secure electronic payment and risk management solutions to organizations that process orders for goods and services over the Internet.
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This is the company that recently bought the highly profitable Authorize.net and is continuing to consilidate what it can in the electronic payment processing industry. I see nothing but continued growth for this sector for the forseeable future. I'm talking about a minimum of 20% year over year growth for the next five years. I'm pulling that figure directly out of my ass, but I really do believe it. Most people forget about this aspect of online business unless they actually run one, but every single web site that does their own online credit card payments must pay someone like Authorize.net to process transactions for their web site. Authorize.net is still among a short list of payment processing companies that has excellent name recognition and critical mass among software developers so that they will remain a dominant name in payment processing unless their new ownership at CyberSource does something incredibly stupid and changes the name, or the service itself becomes unreliable. This kind of business is a cash cow...it's the kind of thing that, as a customer, you "set and forget" until a problem occurs, so if CyberSource handles its technical obligations well, its payment processing business should continue to be extremely profitable, especially the recently acquired Authorize.net business.
If you're wondering about the recent price spike, this is due to a convergence of both positive technical indicators and news. I'm hearing rumors that MasterCard (MA) may be looking to acquire a large percentage of CYBS. If this rumor turns out to be true, look for the price to spike well into the $20-22 range before it finally hits a near-term high, otherwise, this stock may be topped out for the near term and it might be wise to take some profits while the technicals rebalance. All you buy-and-hold folks should hold tight because the long-term outlook for CYBS remains glorious, so take your dips as buying opportunities. Phenomenal growth continues for both CYBS and ANET and with Amazon reporting another record-breaking year in online sales despite a larger retail sector downturn, look for CYBS to report similar positive news when they have their next earnings announcement on 1/24/2008.
This stock has just been killed for absolutely no good reason. Serious buying opportunity at anything under $14.00.
Anyone who took my advice to buy this stock at any price under $14.00 is now sitting on a humungous pile of cash. You're welcome. Hold until 19, dump it and wait for a retreat, or just hold it if you want an awesome long-term growth stock. These guys are still off most people's radar screens, but they are starting to get some serious institutional interest after showing more than 100% growth over the past year. They are the clear leader in their industry right now.
Wake up folks, this company is still growing at close to 20% per year in spite of the current economic problems. CYBS recently announced yet another excellent quarter, beating analyst estimates by a penny again. A couple of days later they announced another stock buyback program. Looking at the buy volume recently, it looks like they are already taking advantage of market conditions to make the most of their buyback program. The stock is up about 38% in the past week and it looks poised to go much higher. CYBS has heavy coverage by money managers and over 90% institutional ownership, so I expect it to go much higher in the near future as volume increases. I expect buy volume to increase into the 4th quarter as investors flock to the handful of companies that look to be holding up in the face of this nasty economic downturn. I doubled down last week at $7.50 a share and missed a chance to get more at a new 52-week low of $6.00...I'm still kicking myself for missing an easy 34% gain in a week...I only made 17%. Historically, CYBS seems to bounce hard when it hits a technical bottom, which I attribute to institutional ownership buying on technical triggers. Volume always spikes when they hit a low and the 5 year chart on this stock suggests that this stock could easily be in the $19-$21 range within a few months.
DOH! I was wrong, they aren't growing at a nice 20% a year.... they just announced earnings in the middle of the worst economy in my lifetime and they grew at about 35% this year and about doubled their earnings compared same time last year. I feel like I'm in on some big secret here. Even the analysts were totally clueless on this...several of them downgraded the stock a week or two before the latest earnings and now everyone is scrambling to get some CYBS into their portfolios so they don't look like idiots. Well, guess what? This is just the tip of the iceberg for CYBS. As soon as the economy picks up even slightly and their number of transactions per customer begin to increase they will see massive earnings increases without even growing their market share. This is quite frankly the only company in the online payment processing space worth risking any money on and it's not much of a risk. That's why CYBS is spending so much of it's cash on hand on its own stock. Look at their 5 year chart...this is a long term high growth trend that is totally predictable. As long as internet traffic and internet business continues to grow, so will Cybersource's bottom line. If someone like Google decides to go head to head and compete in the same space it will simply take them too long for CYBS investors not to see it coming. Even if a new competing platform is rock-solid and feature-rich from day 1 (which it won't be), it's such a pain in the butt for web developers to switch from one processor to another that there's not much motivation. No one else will be able to compete with their pricing to the point that you'll see a mass migration. The more entrenched and ubiquitous they become, the harder it will be to knock them off their throne. I'm still very bullish on this stock and continue to accumulate it my real portfolio. I just watch the charts and buy on the dips and occasionally even take some profits like I did last Friday.Long term investors should seriously just set up a DRIP through some place like ShareBuilder and let it ride baby! Don't look at it, just keep cost averaging for a few years and when you're done you should be sitting on a pile of money. No, actually look at it every day, just don't get nervous and sell on short term dips...use those to buy more.
For any short-term investors that are holding CYBS, you might want to unload tomorrow before they announce earnings. In previous quarters there was a selloff right before earnings announcements and then investors scrambled to get back in after the announcements that they beat earnings. I expect them to top estimates again, but this time there's been significant run-up in the price because the institutional investors are finally starting to wake up to CYBS's immunity to the economic downturn. So they've already had quite a run in the past quarter and it might be good to take some profits tomorrow and see what happens after earnings is announced. Of course, there's a chance it will spike again Friday if they blow the doors off their earnings estimates, but I expect they will beat estimates by $.02-.05 and I think most of that is already factored into the price. I already unloaded 50% of my position last week so I can be ready to buy back in on the next dip. The MACD doesn't look like this price can be sustained without a pullback soon, even though the charts still look bullish overall.
I'm really starting to feel like a broken record here. CYBS price has continued to show strength despite the weak economy for the same reasons all the internet ecommerce big-boys are showing strength. It's called a trend folks and the ecommerce growth trend is still firmly in place. There was a bit of a selloff in CYBS over the past month, but they are about to announce earnings tomorrow after close and once again I expect them to meet or beat analyst estimates. If the economic climate is really starting to turn around, look for CYBS to beat their estimate by between 3 and 5 cents. There will be probably be a short term peak on the charts on Friday at which point short term investors will want to take profits AGAIN. This stock is one of the few in my CAPS portfolio that I actually trade in real life and it's usually one of my most profitable trades. This stock has gone up like clockwork every year for over 6 years despite anything the economy throws at it. There was a major selloff when the whole market tanked at the end of last year (2008), but aside from that, it's seen somewhere around 20-50% price appreciation for over 6 years straight. I've never seen a more consistent up trend in a tech stock, certainly not in a market like this. I'm really starting to feel like CYBS is a sure thing and I should just throw all my eggs in this basket. At the moment I've got 51% of my real portfolio in CYBS. I'll be taking some off the table on Friday if the stock behaves as expected.