Planet Payment Inc: Does This Stock Have Triple-Digit Upside?
Planet Payment a Top Tech Stock for 2016
The global retail marketplace is enormous and growing exponentially as producers of goods sell in every corner of the world. This is the new norm in retail and companies are quickly adapting. However, to allow the sales process to be seamless, there must be the transactional infrastructure to enable this. This is why small emerging technology companies like Planet Payment Inc (NASDAQ:PLPM) stock should be on your radar.
Armed with a market capitalization of approximately $220 million, Planet Payment is not a big company. It is, however, showing excellent fundamentals and growth prospects. Planet Payment has been around since 1999 and is finally beginning to deliver the kind of revenue and growth that Wall Street looks for in a small-cap stock rather than a start-up.
Planet Payment is the developer of a transaction platform that allows companies to sell their goods to buyers globally. The solution allows for international payments, transactions, and multi-currency processing. The solution is currently active in 23 countries spread across Asia, the Americas, Europe, Africa, and the Middle East—that’s a massive market for American companies.
With the company’s growth, PLPM stock has been ratcheting higher on the chart. The stock has more than tripled from $1.33 in November 2014 and has vaulted higher after a break at $3.20.
Compared to the S&P 500, Planet Payment has been stellar. PLPM has surged 76% over the past 52 weeks to a 52-week, record-setting high of $4.69 on June 23.
The PLPM stock chart below is showing a bullish golden cross formation, with the stock’s 50-day moving average (MA) above its 200-day MA. The moves have been spectacular but based on the growth metrics, there is still room to ride higher—as long as the company doesn’t disappoint.
Chart courtesy of www.StockCharts.com
A look at the revenue side shows higher sequential revenue growth in three straight years, from $43.58 million in 2012 to $52.82 million in 2015.
While the compound average growth rate for revenue was only 6.62% over the last three years, the forward growth rate is higher at 11.3% and 12.4% to $58.76 million and $64.79 million, respectively, according to Thomson Financial.
As far as earnings, Planet Payment is profitable and has recorded three straight years of profits and sequential growth. The earnings growth is expected to continue with the company set to earn $0.16 per diluted share this year, followed by $0.21 per diluted share in 2027, according to Thomson Financial estimates.
Even with the share appreciation, PLPM stock trades at a reasonable 19.1X its 2017 earnings per share and a price-to-earnings growth (PEG) ratio of 1.12. These are not insane valuations and indicate there could be more gains ahead for PLPM.
Of course, the company must deliver to trigger a higher valuation and that’s the risk.
