GPN Stock’s Reduced Price Presents an Opportunity
Technology stocks continue to be mired in a deep bear market, with the Nasdaq down by 35% from its high and searching for support. While the sentiment is bearish and investors have rushed for the exits, there are still opportunities to consider.
Take the case of Global Payments Inc (NYSE:GPN), a global developer of payment technology and software solutions. Like other technology stocks, Global Payments stock has slid recently. Its price deterioration presents a contrarian opportunity to long-term investors.
Global Payments Inc’s fundamentals support a long-term bull case for GPN stock.
The company’s revenues nearly doubled from $4.9 billion in 2019 to a record $8.5 billion in 2021. Along the way, Global Payments Inc also generated positive earnings before interest, taxes, depreciation, and amortization (EBITDA); generally accepted accounting principles (GAAP) diluted earnings per share (EPS); and free cash flow (FCF).
|Fiscal Year||EBITDA (Billions)||GAAP Diluted EPS||FCF (Billions)|
(Source: “Global Payments Inc.” MarketWatch, last accessed November 8, 2022.)
Significant Upside for Global Payments Stock
Global Payments Inc’s three-year stock chart below shows a strong rally from its March 2020 low to its record high in April 2021.
GPN stock failed to hold at its high, though. Global Payments stock has fallen by about 36% from its 52-week high of $153.76 and 56% from its record high of $220.81.
A death cross pattern surfaced in August 2021. This is a bearish technical sign that appears when the 50-day moving average breaks below the 200-day moving average.
Since then, shares of Global Payments Inc have been in a nasty downward channel. GPN stock fell to a 52-week low of $96.82 on November 3, representing its lowest level since December 2018.
Chart courtesy of StockCharts.com
At this point, Global Payments stock is struggling to find support well below both of its key moving averages. Watch for GPN stock to test $94.81, which was set in December 2018. Failing to hold at that level could lead shares of Global Payments Inc to move toward the $80.00 level, which they last reached in April 2017.
Investing in Global Payments Inc isn’t without risk, especially in the current market environment, but Global Payments stock’s attractive risk/reward trade-off makes it intriguing.
Look for GPN stock’s moving averages to provide initial targets. Above those levels is the horizontal 61.8% Fibonacci retracement price target of $143.58, followed by the 50% line at $156.44. This translates to a potential move of about $60.0 (63%).
The downside risk with Global Payments stock is roughly $16.00, but my view is that its upside potential more than compensates for the risk.