An Improving Economy Means More Money Moving Around

Consumer spending data shows that customers continue to flock to stores. And that they’re opening up their wallets to buy. The total number of transactions continues to increase, indicating good news for investors in payment companies.

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  • That can include anything from the credit card companies, to back-end payment and services, including companies that provide services for merchants. While concerns over consumer spending have impacted this back-end, it’s clear that the growth trend of consumer spending may continue to rise.

    That’s why analysts are getting more bullish on payment companies. Block (SQ) just received upgrades from two analysts, who see more growth opportunities ahead.

    Shares are down 15 percent over the past year, far lagging the market, although they have been trending higher in recent months. Meanwhile, rising transactions have been great operationally. Block has seen revenues rise by 24 percent in the past 12 months.

    If that trend continues, shares may outperform the rest of the market this year.

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  • Action to take: Investors may want to build a partial position now, and add to it on any further drops in shares, given Block’s volatility. At present, the company does not pay a dividend.

    For traders, the April $70 calls, last going for about $6.40, could see high double-digit returns in the coming months if shares continue their recent trend higher.


    Disclosure: The author of this article has a position in the company mentioned here, but does not intend to further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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