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TransUnion (TRU) Hits 52-Week High: Is More Upside Left?


Shares of data and analytics solutions provider, TransUnion TRU scaled a new 52-week high of $57.23 in yesterday’s trading session, before closing a tad lower at $56.68 for a solid one-year return of 77.1%. Barring minor hiccups, the company’s share price has steadily been on an uptrend since mid-September last year. This Zacks Rank #3 (Hold) stock has the potential for further price appreciation with long-term earnings growth expectations of 10% and looks poised to touch new highs in 2018.

Growth Drivers

TransUnion has an attractive business model with highly recurring and diversified revenue streams, significant operating leverage, low capital requirements and strong and stable cash flow. The company’s gigantic treasure trove of data is its most distinguishing asset and is perhaps the biggest barrier to entry for competitors. TransUnion has more than 30 petabytes of data, growing at an average of above 25% annually since 2010. Acquiring or building such data involves huge costs, making it extremely difficult for a new company to build the contacts and data that TransUnion already has. This fortifies its ability to sustain competitive advantage and protect its market share, enabling it to maintain a healthy growth momentum.

TransUnion’s addressable market includes the burgeoning Big Data and analytics, which is expanding rapidly as companies comprehend the advantages of building an analytical enterprise where decisions are derived from data and insights. Numerous underlying trends are supporting this market growth, including the creation of massive amounts of data, advances in technology and analytics that allow data to be processed more swiftly and efficiently for key insights across industries and geographies.

The inherent nature and significance of its solutions in customers’ decision-making endow it with high customer retention and revenue visibility. Impressively, it deals with the 10 largest U.S. banks, top five credit card issuers, the biggest 25 auto lenders and thousands of healthcare providers and federal, state and local government agencies. Also, the company makes significant investments to modernize its infrastructure and facilitate the seamless transition to the latest Big Data and analytics technologies. This enables TransUnion to expand its business and improve cost structure.

Moreover, as emerging market economies continue to develop and mature, the company is well-positioned to gain from the associated favorable socio-economic trends. Additionally, increased risk of identity theft due to data breaches and higher consumer awareness about the importance and usage of their credit information are propelling the demand for TransUnion’s consumer solutions.

With continued growth impetus and core focus, investors’ confidence is likely to be boosted and the share price is anticipated to hit new 52-week milestones every now and then in 2018.

Stocks to Consider

Better-ranked stocks in the industry include On Assignment, Inc. ASGN, FleetCor Technologies, Inc. FLT and Total System Services, Inc. TSS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

On Assignment has a modest long-term earnings growth expectation of 10%. It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 5.4%.

FleetCor Technologies has a solid long-term earnings growth expectation of 17.7%. It has topped estimates in each of the trailing four quarters with an average positive earnings surprise of 2.5%.

Total System Services has a healthy long-term earnings growth expectation of 12.8%. It topped estimates in each of the trailing four quarters with an average positive earnings surprise of 5.7%.

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