Global Payments Ready to Breakout? – April 14, 2021

In analyzing the chart of Global Payments (GPN), I noticed that it is approaching a key level of resistance.

GPN is a leading provider of payment processing and software solutions and focuses on serving small and midsize merchants. Its payment technology solutions enable its customers to accept card, electronic, check and digital-based payments. Its software solutions help businesses streamline operations.

GPN’s agreement with Amazon’s (AMZN) AWS expands its reach and provides a strong global marketing partnership. Its agreement with Google (GOOGL) will advance its technology-enabled distribution strategy. The company’s cost-cutting initiatives have helped to grow its margins and its cash flows have been improving.

The company has a healthy balance sheet with $1.9 billion in cash compared with $1.2 billion in short-term debt. In its most recent reported quarter, earnings rose 11.1%, but revenue fell 3% year over year.

GPN’s stock is overpriced based on trailing P/E, but only slightly overvalued when looking at its forward P/E of 26.95. The stock has shown mixed performance year to date, but has been trending up since March, leading to a Momentum Grade of B in our POWR Ratings system.

Take a look at the 1-year chart of GPN below with added notations:

GPN has been pushing its way higher ever since hitting its $175 low back in February. The stock has recently stalled at the $215 resistance (red), just as it did back in December and March.

A solid close above that $215 area should lead to much higher prices for GPN. GPN’s $215 resistance level is also a 52-week high. A possible long position on the stock would be on a breakout above that level with a protective stop placed under it.

I have explored virtually every flavor of technical analysis and chart pattern known to mankind. The sad fact is that the vast majority of them don’t work at all.

Author: Christian Tharp, CMT