By Malcolm Stacey | Tuesday 31 May 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Hello Share Swelterers. I don’t much like the name of today’s firm I offer for your consideration. You see, I don’t much take to company titles which are hard to remember or even say because they don’t conform to the rules of grammar. The company is FairFX (FFX) which is a prime offender reference my aforementioned prejudice. But having said that, this share is fashionable. That’s because of the EU referendum.
If we leave Europe, the pound is expected to take a hit. I dunno why exactly, as the Euro should also be damaged by one of its biggest members leaving. But there we are.
FairFX issues pre-paid cards so that we can buy foreign currencies in advance. As Brits spend £35 billion abroad annually, you can see that the market is huge. And big demand usually means a rising share price.
The company also allows firms to buy pre-paid cards for the times they send employees abroad. This system - for holidaymakers and business people - is a lot cheaper than relying on banks for foreign withdrawals. That is the big attraction. All my family have Caxton cards, and I should imagine that Fair FX offer the same sort of service.
The EU referendum possibly has a bearing on buying this share. The cards give you a chance to top up on euros or dollars, say, when sterling is strong. So if you think we will come out, you might want to buy foreign currencies now. And you can take a different course of action if you think we will stay in.
Whether or not that sort of malarkey will affect profits and therefore the share price is hard to evaluate. But then so our most decisions share traders like us have to take.
FairFX has more than half a million customers. And as this cheap method of managing your cash abroad becomes better known, I expect that number to jump. There was a pre tax loss last time, but that was because it is investing a lot on growing the operation, which is after all, in its comparative infancy.
Unlike the very ancient Punter’s Return.
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