Total System Services (NYSE:TSS)

CAPS Rating: 5 out of 5

The Company provides electronic payment processing and related services to financial and nonfinancial institutions.

Recs

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Player Avatar TMF42 (51.41) Submitted: 6/24/2010 3:57:58 PM : Outperform Start Price: $13.70 TSS Score: +48.98

TSYS is just plain cheap. The company benefits from recurring revenue streams, reasonably sticky client relationships, a great reputation and generates impressive returns on capital and free cash flow. Its CUP Data ownership is a hidden asset that plays as a nice kicker to its stable domestic processing business. Growth through acquisitions will help diversify domestic revenue and international presence should continue to expand. With an EV/EBITDA multiple of 5.4, mid-teen returns on capital and $300 MM FCF run rate shares of TSS are CHEAP.

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