Nasdaq 100 component Fiserv broke out of a flat base with a buy point of 119.58 after strong earnings on Tuesday. Volume spiked on the breakout, indicating bullish sentiment for the stock. The growth stock has a relative strength line at a 52-week high, indicating strong outperformance vs. the S&P 500.
Fiserv is today's pick for IBD 50 Growth Stocks To Watch. The Wisconsin fintech boasts a Composite Rating of 93 while its EPS Rating is even higher, at 95. The 92 Relative Strength Rating adds to superior performance compared with other stocks in the IBD database.
Strong Earnings Record
The growth stock has booked superior earnings and sales metrics over the past eight quarters.
In Q1, sales rose 10% from the previous year to $4.5 billion while earnings of $1.58 per share showed 13% growth. In addition, free cash flow increased to $861 million from $603 million a year ago.
The fintech also raised full-year guidance, now expecting 8%-9% growth in organic revenue and $7.40-$7.50 in annual earnings per share, which would mark 12%-14% growth.
Fiserv provides payments and financial technology for banking and commerce, billing and point-of-sale transactions. The stock ranks third in the financial services specialty group.
Growth Stock Excels In Real-Time Payments
The fintech leader will offer select clients access to FedNow, starting in July. This service will offer payments in real time for banks and other financial institutions, enabling instant money transfers for purposes ranging from business-to-business dealings to payroll fulfillment.
Fiserv has offered real-time payments technology for several years through The Clearing House.
Financial institutions use Fiserv's NOW Gateway for real-time payments via several platforms, including Zelle and other digital wallets. Whether customers adopt FedNow or continue to use Fiserv's network with The Clearing House will depend on execution performance, rates and pricing for the service.
But FedNow has the advantage of backing from the Federal Reserve, while The Clearing House is operated by a bank group. In this scheme, banks can tap liquidity quickly between their new FedNow accounts and their master Federal Reserve account.
Fiserv will offer both options for top money-center banks including JP Morgan Chase, Citigroup and Wells Fargo.
Mutual funds own 56% of outstanding FISV shares.
Fund ownership for this growth stock has increased over the past five quarters, according to IBD MarketSmith.
Exchange traded funds also own shares, including the Global X Fintech ETF and the BlackRock Future Financial & Technology ETF.
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