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Here's Why You Should Hold WEX Stock in Your Portfolio Now

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WEX Inc.’s (WEX - Free Report) shares have rallied 27.9% in the past year, outperforming 7.6% growth of the industry it belongs to.

Zacks Investment ResearchImage Source: Zacks Investment Research

Earnings are anticipated to register growth of 38.1% and 31.6% in 2021 and 2022, respectively. The stock’s long-term expected EPS growth rate is pegged at 27.2%.

Key Growth Drivers

WEX’s strategic revenue-generation efforts include utilizing its extensive network of fuel and service providers, transaction volume growth, product excellence, marketing capabilities along with sales force productivity.

Acquisitions are acting as a key growth catalyst for WEX. Recently, on Jun 1, the company completed the acquisition of benefitexpress. The buyout is expected to expand WEX’s offerings in benefits administration by bringing in a complementary suite of solutions to its Health offerings. In 2020, WEX made acquisitions of eNett and Optal. Both are expected to strengthen the company’s position in the global travel marketplace.

Primary Concern

WEX’s cash and cash equivalent balance of $974 million at the end of first-quarter 2021 was well below the long-term debt level of $2.5 billion. This underscores that the company doesn’t have enough cash to meet this debt burden. Nevertheless, the cash level can meet the short-term debt of $354 million.

Zacks Rank and Stocks to Consider

WEX currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector include The Interpublic Group of Companies, Inc. ((IPG - Free Report) ), Cross Country Healthcare ((CCRN - Free Report) ) and Paychex, Inc. ((PAYX - Free Report) ), each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term (three to five years) expected earnings per share growth rate for The Interpublic Group of Companies, Cross Country Healthcare and Paychex is pegged at 10.2%, 10.5% and 8%, respectively.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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