The Best Play in a Trillion-Dollar Market

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In the go-go 1980s - back when the hit movie Wall Street told us that "Greed Is Good" -Carl Icahn was known as a "corporate raider"... and was revered for his windfall-producing decisiveness.

Icahn is still around. And he's still active. Only now - in the politically correct 2000s - he's known as an "activist investor" who's gone up against the likes of Apple Inc. (Nasdaq: AAPL) and eBay Inc. (Nasdaq: EBAY).

I don't really care what we call him. I just know that Icahn has done us a big, big favor.

You see, Icahn the Great has just cleared our path to a big profit - a company in a hot new market whose shares could surge 50% in the next two years.

And today I'm going to tell you a tale that shows how Icahn did this - and show you the stock that's ready to run.

Anatomy of an "Activist"

During his 36 years in the stocks game, Icahn has demonstrated a flair for pressuring CEOs into making big changes to the companies they run. Stock buybacks, dividend hikes, special payouts, spin-offs, and corporate restructurings... the recommended changes might vary from one "target" company to the next. But the results were generally the same: The target company's share price would zoom, creating a windfall for Icahn - and for the investors who have increasingly followed every move that he makes.

Icahn's newest target is eBay, the leader in online auctions. He's trying to force eBay to spin off its highly valuable PayPal subsidiary. In some ways, it was a shrewd move: Icahn has recognized - as we have with you - that the whole electronic payments emerging sector (also known as a "digital wallet") has a big upside.

This time around, Icahn's power play isn't working. He's met with intense resistance from the company.

For us, however, that doesn't matter. Icahn has focused a tremendous amount of investor attention on this new sector's huge potential upside. He just picked the wrong company.

We didn't make that mistake.

In fact, we've identified a digital-payments stock that's making all the right moves.

So this time, you're going to leave Icahn in the dust.

Before we tell you the name of the company, let's look at the catalysts that are making this new business so crucial.

In the base year of 2012, global digital transactions came in at an astounding $4.6 trillion, the Electronic Transactions Association (ETA) says. By 2017, that figure will rise 58% to $7.3 trillion.

Here's the ETA stat I just love. Had you invested $100 in the S&P 500 in early 2007, that would now be worth about $130. But that same money invested in a basket of digital payment stocks would have a value of $259.

The Digital Dollar

That's why you would do well to take a look at FleetCor Technologies Inc. (NYSE: FLT). The company specializes in providing payment-processing services for businesses, commercial fleets, major oil companies, petroleum marketers, and government agencies.

It's particularly big in the energy sector because so many of those firms have workforces distributed around the world, often in very remote locations. FleetCor is a supplier for such major oil businesses as ARCO, BP, and Chevron.

Launching in 1998, the Georgia-based company today is a global enterprise. Consider that it boasts more than 530,000 accounts around the world and also has offices in 43 countries.

And last year, 49% of its sales occurred outside the United States. In fact, this fast-growing mid-cap firm has been picking up overseas operations to fill out its franchise and give it a greater focus on emerging markets, where energy exploration is big business.

Over the last decade, it has acquired roughly 60 other companies that extend its reach and add economies of scale. Last year alone, it bought companies in Australia, Brazil, and New Zealand.

One purchase that really jumps out at me is NexTraq, a U.S.-based leader in a field known as telematics. That's a fancy way of saying that NexTraq uses web-based cloud technology to help its clients improve workforce productivity.

NexTraq also helps clients control costs through real-time vehicle tracking, route optimization, job dispatch, and fuel usage monitoring.

Add it all up and FleetCor ranks as a classic tech supplier firm where integrating new operations greatly adds to its profit margins.

Few consumers have heard of it, and yet FleetCor is playing a critical role in helping a growing list of firms process and manage their payment systems in a way that lowers their costs.

Here's why FleetCor is indispensable to its clients...

Let's say you have a business that operates a fleet of vehicles. You can use the company's FleetCards USA to buy gas and manage fuel and maintenance expenses. You can also find the nearest fuel stop, track driver locations, and take a bite out of fraudulent charges.

Lest you think of the company as little more than a glorified credit card firm, consider that FleetCor has sophisticated software that provides smooth transactions. It also has developed advanced algorithms that combat credit card theft.

Please don't gloss over the importance of that last item. Just look at what happened to Target Corp. (NYSE: TGT) when it suffered a data breach involving customer credit cards over the holiday season.

Target lost a lot of goodwill among its customers. The stock has since come back, but between Thanksgiving and early February, it was down more than 14%. However, its CFO recently had to testify in front of Congress to show the company was taking steps to better safeguard sensitive customer data.

Thus, in this era of electronic transactions, payment security is a big selling point for FleetCor. And that's a good thing, because last year it conducted more than 327 million transactions, or one for nearly every man, woman, and child in the United States.

As I see it, there's another key factor that makes FleetCor such a winner. It has to do with our March 26th conversation about the importance of finding great tech leaders.

CEO Ronald Clarke hails from tech giant GE. He also was a leader at Automatic Data Processing Inc., a computer services company known for its closely watched jobs reports.

FleetCor is no slouch when it comes to the financials. Trading at roughly $113, FleetCor has a market cap of $9.3 billion and operating margins of 48%. It has a 26% return on stockholders equity and last year brought in $425 million in free cash flow.

In last year's fourth quarter, adjusted net earnings per share came in at $1.08, up 32% from the year ago. Over the past three years, FleetCor has grown its earning per share by an average 32% annually.

At that rate, earnings could double in just a little over two years. That's why I think we could easily see 50% upside for the stock by then.

I believe FleetCor is one of those great growth stocks that can really help lift your portfolio.

The company is expanding through a series of savvy acquisitions and organic growth. It has a huge customer base, great technology, and excellent management.

And that makes it just the kind of stock that can really help you build your net worth.

About the Author

Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.

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