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5-Star Stocks Poised to Pop: Jack Henry

Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Jack Henry & Associates (Nasdaq: JKHY  ) , which makes computer systems for financial institutions, has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Jack Henry's business and see what CAPS investors are saying about the stock right now.

Jack Henry facts

Headquarters (founded)

Monett, Miss. (1969)

Market Cap

$1.75 billion

Industry

Application Software

TTM Revenue

$742.4 million

Management

CEO John Prim (since 2004)
CFO Kevin Williams (since 2001)

Return on Equity (average, last three years)

17.4%

Dividend Yield

1.6%

Competitors

Fiserv (Nasdaq: FISV  )
IBM (NYSE: IBM  )

CAPS Members Bullish on JKHY Also Bullish on:

Procter & Gamble (NYSE: PG  )
General Electric (NYSE: GE  )

CAPS Members Bearish on JKHY Also Bearish on:

Timberland (NYSE: TBL  )
Alon USA Energy (NYSE: ALJ  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 182 of the 188 members who have rated Jack Henry -- some 97% -- believe the stock will outperform the S&P 500 going forward. These bulls include Toots99 and my fellow Fool Todd Wenning (TMFPhila), who is ranked in the top 20% of our community.

Last year, Toots99 tapped the stock as a rare bankable opportunity: "Awesome computer system set up for banks. Gaining market share with the small community bank set and looking to expand to larger banks with branches in excess of 30+. Robust business with great potential."

In a more recent pitch, Todd also urged Fools to get jacked up about Jack Henry:

This is a neat little company -- a bank/financial computer solutions company with increasing recurring revenues, a consistent history of FCF generation, no long-term debt, solid insider ownership, tenured leadership … The risk here, obviously, is if small- and mid-size banks are the next to fall or consolidate. However, I think with the big banks busy gobbling each other up and picking through the dumpster full of fallen foes, the smaller banks should fly under the radar while this credit mess works itself out. Plus, smaller banks could see more customers after watching the big boys fall.

What do you think about Jack Henry, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Jack Henry. Procter & Gamble is a Motley Fool Income Investor recommendation, and the Fool owns shares of it. The Fool's disclosure policy always gets a perfect score.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 21, 2009, at 10:52 AM, Justfoolingya wrote:

    Jack Henry does not compete with IBM. IBM is a supplier of systems to JHA under a VAR agreement.

  • Report this Comment On July 21, 2009, at 5:51 PM, newbutoldie wrote:

    JKHY is a good company. With MV being bought by FIS one of the major independent core processors serving the mid market and small banks has been eliminated. FIS/MV will be distracted and won't pay as much attention to the small banks resulting in come pick-up for JKHY if they play their cards right. On the other hand, FIS/MV may have so much scale that they could out price JKHY in a very price sensitive market. Odds of doing well are higher, however.

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