If quote machines had a dash of bravado and personality, I could imagine someone typing in the ticker symbol for Online Resources (NASDAQ:ORCC) only to have it come back: "Are you sure you don't mean Oracle (NASDAQ:ORCL)? Maybe you mistyped that last C?"
When you insist that ORCC is the correct symbol, it would suggest Googling for orca whales instead.
No, it seems as though the market isn't giving Online Resources a lot of respect. And if you're like me, by the time you're done reading this piece you may find yourself scratching your head as to why that is exactly.
Online Resources arms financial Davids with the virtual slingshots to take on the Goliaths online. By providing more than 650 different small banks, thrifts, and credit unions with the ability to provide online banking services it helps them stand up against the self-enabled Citigroups (NYSE:C) and Bank of Americas (NYSE:BAC) on the Internet.
While other financial software specialists like Hidden Gems newsletter recommendation Pegasystems (NASDAQ:PEGA) have moved on to serve the health-care industry, Online Resources knows what Jesse James does about going after the banks: It's where the money is.
This year the company will have processed more than 100 million transactions for a million different bank customers. Online payments should top the $10 billion mark in total.
Last night the company provided its guidance for next year. It is looking to grow revenues by 35% to just more than $55 million. Earnings will expand by 26% to come in between $0.30 and $0.33 a share.
While you may associate a good deal of volatility with online financial services that is usually the handiwork of discount brokers such as E*Trade (NYSE:ET) and Ameritrade (NASDAQ:AMTD) that tend to fluctuate with the rise and fall of stock trading volume. Online Resources is a more consistent provider of the rudimentary online banking services that are steady yet clearly growing. Rising interest rates aren't going to stop you from turning to paying your bills online in the future. A rough go at the stock market isn't going to stop you from checking your bank savings account balance.
While larger regional banks are always hungry to scoop up smaller financial institutions those that aspire for greater relevance and standalone independence are likely to turn to Online Resources to make sure that they can compete with the big boys online.
Yet shares of the growing company closed at just $6.70 yesterday. That means that the stock can be had for 20 to 22 times year ahead earnings -- a multiple that is less than the company's growth rate.
And if you're worried that Online Resources is the type of company that overpromises and underdelivers, think again. At this time last year the company provided its 2004 guidance, which called for earnings to come in between $0.18 and $0.22 a share. That target is now closer to the $0.25 mark.
Is finding a new broker with online banking services as complicated as it seems? No. Have you checked out the Broker Comparison Table lately? Do you bank online yet? All this and more -- in the Discount Brokers discussion board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz has been investing through online discount brokers and banking online since 1991. He likes the sector's chances, but he does not own shares in any company mentioned in this story. He is a member of the Rule Breakers analytical team, seeking out tomorrow's great growth stocks today.
