Shares of business services provider TransUnion (TRU - Free Report) hit a new 52-week high of $35.45 on Jul 12, 2016, before closing the trading session a notch lower at $35.11 with a healthy year-to-date return of 27.4%.
TransUnion’s share price has been on a steady uptrend since Mar 2016. Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock still has enough potential for further upside. The stock is currently trading at a forward P/E of 27.0x and has a long-term earnings growth expectation of 11.9%.
TransUnion serves a broad range of customers across multiple geographies and verticals, and boasts over 35 million customers. The company has recently acquired healthcare services firm Auditz LLC to broaden its product line with Auditz' innovative Transfer DRG (diagnosis related groups) solution. The DRG solution optimizes the recovery of costs associated with Medicare patient transfer, which often results in the underpayment of millions of dollars per year to care providers. This would bring new capabilities to TransUnion to facilitate healthcare providers better manage their revenue cycles.
The company is well positioned to gain from the development in emerging market economies and the associated favorable socio-economic trends. Additionally, increased risk of identity theft due to data breaches and higher consumer awareness about the importance and usage of their credit information are propelling the demand for TransUnion’s consumer solutions. Furthermore, increasingly complex regulations, such as new capital requirements and the Dodd-Frank Act, have boosted the demand for TransUnion’s services.
TransUnion has an attractive business model with highly recurring and diversified revenue streams, significant operating leverage, low capital requirements and strong and stable cash flows. Impressively, it deals with the 10 largest U.S. banks, the top 5 credit card issuers, the biggest 25 auto lenders and thousands of healthcare providers and federal, state and local government agencies. The company also keeps making significant investments to modernize its infrastructure and facilitate the seamless transition to the latest Big Data and analytics technologies. This enables TransUnion to expand its business and improve its cost structure.
All these measures for a relatively healthy growth impetus for the near future probably raised investor confidence and drove the shares to a 52-week high.
Stocks to Consider
Some better-ranked stocks in the industry include ARI Network Services Inc. , Accretive Health, Inc. and Accenture plc (ACN - Free Report) , each carrying a Zacks Rank #2 (Buy).
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