Stephens Inc. Analyst Brett Huff says Total System Services, Inc. (TSS) is his best idea at the moment. One of the reasons he is positive on the stock is the company’s recent contract with Bank of America (BAC), in which Bank of America switched from using an in-house system to issue credit cards to an outsourced system provided by TSS.
“This is one of the largest outsourcing deals for credit cards that we’ve seen,” Huff says. “That has really driven some incremental growth that we think investors should pay attention to that will last here for the next three or four quarters.”
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Huff says he also likes TSS because of its capital allocation strategy.
“There’s been a more aggressive shift to being more shareholder friendly in terms of capital allocation, and that really means that TSS management has committed to buying back more stock and buying back stock at a level that we think really utilizes their excellent free cash flow,” Huff says.
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