Pull Money Out of Thin Air
|Written by GSCR Staff|
|Thursday, 05 March 2015 06:30|
We conclude this week’s ‘March of the Millennials’ theme with another Gen Y stock.
We have featured USA Technologies, Inc. (NASDAQ – USAT - $2.31) in the Market Monitor and Goldman Guide over the last few years and we believe that we have reached yet another favorable entry point. For the uninitiated, USA Technologies is a leader of wireless, cashless payment and M2M telemetry solutions for small-ticket, self-serve retailing industries.
As we mentioned earlier this week, Millennials love their Apple products (NASDAQ – AAPL) more than life itself. One of the hot new products/services offered by the Company is Apple Pay, allowing consumers to process transactions with mobile apps, and literally pull money ‘out of thin air’.
The chart below illustrates the stock’s one year performance along with the 200-day EMA for. It is easily seen that the long term technical indicator definitely is favorable for the stock.
USAT 1-Year Chart – 200 Day EMA
More importantly, the Company knows where its bread and butter and several weeks ago it announced that about 200,000 of its points of purchase will now accept Apple Pay. The Company is outfitting laundromats, parking kiosks and "other self-serve appliances" with the payment terminals. This could create huge tailwinds for USA Technologies for future revenue streams.
There are a few other metrics not to overlook here when it comes to USAT. A low EV/EBITDA of 15 is the first. Plus, USA Technologies has been granted 87 patents and is well-positioned in its space, as evidenced by its recently released 2014 results and 2015 top-line guidance. For full year fiscal 2015, management continues to expect total revenue in the range of $51.0 million to $53.0 million, for a growth rate of 20% to 26%.
In our view, USAT is a solid technology play that should maintain its momentum this year. Investors should target the $3 level by 4Q15.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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