Fiserv is red hot. One fund manager thinks it can be a long-term winner

The stock market rally for payments stock Fiserv is showing no signs of slowing down, and the company is winning over some new investors. The stock is up almost 12% in November, and nearly 67% for the year. Patrick Burton, senior managing director and portfolio manager at Winslow Capital Management, said his team has been buying Fiserv in recent months and plans to keep adding to the position. “We think over the next three years they can grow the topline pretty close to 15%. The management team has done a phenomenal job in terms of increasing margins. We think the margin expansion continues,” Burton said. FI YTD mountain Fiserv’s strong year has continued in November. Part of the optimism stems from the fact that Fiserv’s $22 billion acquisition of First Data in 2019 is paying huge dividends, according to Burton. That could let the company spend more on future stock buybacks. “You roll all that together and you could wind up with like an 18%-20% type of earnings per share growth company,” Burton said. Burton is the manager of NYLI Winslow Large Cap Growth Fund (MLAAX) , which has a four-star rating from Morningstar. He also manages two ETFs with similar strategies — the NYLI Winslow Focused Large Cap Growth ETF (IWFG) and NYLI Winslow Large Cap Growth ETF (IWLG) . His team uses a bottoms-up stock selection process to find companies that can maintain or expand high growth rates, he told CNBC. About the pick Fiserv is a payments company with several different units, including Clover, which helps small- and mid-sized businesses with a point-of-sale system. The company also helps other financial firms use the Zelle payment platform. Milwaukee-based Fiserv posted third-quarter results in October, with earnings per share of $2.30 that were four cents ahead of analysts’ consensus expectations, according to FactSet, while revenue of $4.88 billion was slightly below estimates of $4.90 billion. The company also raised full-year estimates for organic revenue growth. Fiserv went public in 1986 and today has a market cap of $128 billion and 42,000 employees. Fiserv’s CEO is Frank Bisignano, who led First Data before the 2019 deal that put the two firms together. Other perspectives Burton at Windsor Capital is not alone in remaining bullish on Fiserv. According to LSEG, 32 of 38 analysts covering the company rate it either a buy or strong buy. Fiserv is also on Citigroup’s “Thematic 30” recommendation list. Among other stock pickers, Sanders Capital — run by former Alliance Bernstein CEO Lewis Sanders — disclosed in a recent filing that it had built a stake in Fiserv worth more than $700 million in the third quarter. To be sure, a contrarian handful take a more skeptical view of Fiserv’s strong performance. Redburn Atlantic analyst Dominic Ball said in an Oct. 24 note that the stock may be getting too expensive. “There is typically mean reversion in the bank tech market, in which the company has outperformed,” said Ball, who has a neutral rating on the stock. “Clover as it expands to [small- and medium sized] merchants will face a higher cost of growth, and the stock’s valuation has diverged meaningfully from its peers.” — CNBC’s Michael Bloom contributed reporting.