Today's pick for IBD 50 Growth Stocks To Watch, Shift4 Payments, is in consolidation and approaching a buy point of 76.40. Shares are finding support along the 50-day line within the base, according to IBD MarketSmith chart analysis.
The growth stock has a strong Composite Rating of 92 and an adequate EPS Rating of 82. The RS Rating of 90 shows the stock's outperformance compared to others. The RS Rating has also improved from five weeks ago, though it's nosed down a bit recently.
Sales growth has been steady, ranging between 35% and 89% over the past seven quarters. Sales grew 36% to $547 million in the first quarter, while EPS of 51 cents was up an impressive 240%.
An Early Entry For Growth Stock?
After network fees, Shift4 Payments posted sales of $200 million. Shares rose within the base on May 5 after results but faced resistance at the 50-day line around 69 in June. The stock cleared its 50-day line in early July and could offer an early entry as it tracks just below that price level.
Second-quarter earnings are due on Aug. 3. Analysts polled by FactSet expect $225 million sales in the second quarter after network fees, with earnings per share of 52 cents.
Shift4 Payments provides payments processing tools. It provides software for money transaction to the travel and hospitality, food and beverage, sports, entertainment, retail, e-commerce and other industries. As of the end of the first quarter, Shift4 Payments supported around 50 enterprise merchants that have over $100 million a year in payments processing.
The company operates three segments: The payments platform provides card processing services, while the technology solutions segment offers customer engagement tools. Its partner-centric feature provides sales and marketing support.
FOUR went public in June 2020 at a listing price of $23 per share. The payments processing company acquired Harbortouch in 2018 and made it part of its point-of-sale system. The company acquired 3dcart in 2020 and rebranded 3dcart's e-commerce platform as Shift4Shop. The platform offers a website builder, and product management and marketing tools. The growth stock benefits from a partnership with PayPal for payments, which allows clients to add PayPal's shopping cart to their websites.
Growth Stock Leads The Payments Processing Group
FOUR leads the credit card and payments processing group.
Mutual funds own 74% of outstanding shares. More funds have been picking up the stock over the past six quarters. However, the Accumulation/Distribution Rating of D+ is less than optimal.
Invesco Discovery Fund (OPOCX) holds shares of FOUR. Exchange traded funds hold the stock as well. Fidelity Growth Opportunities ETF and First Trust Multi Cap Growth AlphaDEX ETF hold shares of FOUR.
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