What does Computershare do?
Computershare [ASX:CPU] is a global share registry business. That means it manages shareholder communications for listed companies around the world. It has many other strands to its business too, including managing corporate actions (takeovers etc.) paying dividends, and managing mortgage payments in the UK market.
It generates fees for performing all these tasks. As it holds large short term cash balances (before distributing to shareholders) it also generates interest revenue. The move to slightly higher interest rates around the world is a plus for Computershare.
What’s happening to CPU’s share price?
Today, CPU’s share price jumped more than 3.5%. It comes on the back of a positive operational update which indicated the business was on track for sustainable growth.
As you can see in the chart below, CPU has been moving steadily higher since August last year. Positively, the move to new share price highs on a bullish trading update suggests there is more room to move for CPU. Often, a share price will rally into a positive announcement and then sell off once the announcement is out.
What now for CPU?
CPU benefits from increased economic and financial market activity. ISo its share price rise to new all-time highs tells you that investor and corporate activity is quite healthy, and not as gloomy as you might think from reading the press.
I expect to see CPU grow revenue and profits for the next few years, as the global economy continues to strengthen and move away from the threat of deflation. This solid fundamental backdrop, along with a healthy looking chart, should ensure steady share price gains.
Never assess a stock’s fundamentals without looking at the chart too. Combining fundamental analysis with charting can yield powerful results.
Editor, Money Morning