Bank on These Stocks When the Time Is Right
These wide-moat companies offer very stable business models and sticky customer bases, but investors should wait for a better opportunity to buy shares.
Brett Horn: Fiserv and Jack Henry are two wide-moat bank technology companies. The foundation of their businesses is what's called core processing. This is the most basic day-to-day system the banks use to operate their business. As a result, these customers are incredibly sticky.
The average bank retains this core processing system for about 30 years on average. These companies then leverage these essentially captive relationships to cross-sell a bunch of ancillary services such as electronic bill payment or online banking. As a result, you have a very stable business model, with about 85% revenue recurring under long-term contracts.
Brett Horn does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.