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Shares of Xerox Corporation (XRX - Analyst Report) scaled a 52-week high of $12.29 during the trading session on Monday, before closing at $12.21 for a solid year-over-year return of 65.0%.

Xerox recently announced an agreement to acquire Germany-based Invoco Holding, thereby amplifying its European customer care services. This acquisition will help to expand Xerox’s capabilities in Germany and expand its services in Switzerland and Austria.

At the same time, Xerox continues to generate significant cash flow and deploys it to maximize shareholder value. The stock is currently trading at a forward P/E of 10.6x and has a long-term earnings growth expectation of 7.7%.

Growth Drivers

Xerox expects strong demand from small and midsize businesses in the United States going forward.

The company expects to expand its offerings through inorganic measures to add more clients to its portfolio. Its existing clients are increasingly expanding their partnerships with Xerox to improve their operations.

The increase in contract value of service signings and a growing order pipeline are strong indicators of robust growth of the company. At the same time, Xerox is continuing its thrust for leadership in Document Technology with innovative products in order to meet the demands of customized communications in digital printing.

Estimate Revisions

Over the last 30 days, none of the analysts have revised their estimates upward or downward for 2013 which led to the Zacks Consensus Estimate being constant at $1.09 and $1.13 for 2013 and 2014, respectively. Despite the lack of estimate revisions, we anticipate an uptrend for the stock backed by its strong growth potential.

Other Stocks to Consider

Xerox currently has a Zacks Rank #4 (Sell). Other better-ranked stocks that are worth a look include NCR Corp. (NCR - Analyst Report), Diebold, Inc. (DBD - Snapshot Report) and Iteris, Inc. (ITI). All these stocks have a Zacks Rank #2 (Buy).

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