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Computershare for the long haul

Global share registry operator Computershare (ASX: CPU) is a solid Australian company with an interesting history and a very bright future. From humble beginnings in 1994, it has grown to a market capitalisation of just over $5.8 billion. Its share price made slow but steady progress from $0.14 until 2000 when it joined, a little unfairly, the other victims of the tech wreck/dot com bubble.

Computershare had peaked at $11.70, the like of which it didn’t see again until early 2010, when it made $12.90 before again succumbing to broader market forces. For two years now, it’s been steadily rebuilding from a low of $6.55, with its most recent peak a month ago at $11.35. The fundamentals of the business remain sound and its growth prospects seem to make it a compelling story now worth looking at. You’d expect it to do well from growing sharemarket activity.

Friday saw Computershare fall 2.1%, substantially more than the market average, to close at $10.27 after opening at $10.50. With the S&P/ASX 100 Index (Index: ^AXTO) (ASX: XTO) likely to track Wall Street down Monday, Computershare starts to present itself more and more as a buying or accumulation opportunity.

Computershare is uniquely positioned as the only global share registrar. It services 14,000 corporations and administers 100 million shareholder accounts in 20 countries overall. It leverages its core business into providing many different services. But it’s also now diversifying into activities not directly sharemarket-related.

Although it could arguably be more exposed than other businesses to short-term sharemarket volatility, that diversification across services and different markets and economies should mean solid long-term growth. And of course its ability to scale its activities, cross-sell products and find new synergies in growing markets gives it a big advantage over competitors.

The company announced the middle of the last month that it would be offshoring some Australian jobs to the Philippines and India — 50 in its Melbourne office from a total of about 1900. It emphasised that it was not closing any Australian facilities and was making the move to better service clients. However, it’s an indication of how the company is looking to streamline global operations, not just for the benefit of clients, but to increase profitability.

In April, Computershare announced it would spend about $US10 million acquiring 25% of United States-based shareholder communications provider INVeSHARE in a deal that would allow it move to full ownership in 2018-19. That follows the bedding down of its then biggest US competitor, the shareholder services division of The Bank of New York Mellon Corporation. US revenue increased in the 2012 financial year by 28%, the biggest rise among any of the company’s global divisions, followed next by continental Europe at 19%. Asia had falling revenue, but still offers plenty of opportunities.

Foolish takeaway

Computershare offers a good growth story for investors wanting long-term prospects rather than a strong yield or quick capital gain. Look to buy on market weakness, especially if it revisits levels under $10 — it could well be worth setting an alert for.

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Motley Fool contributor Andrew Ballard does not own shares in CPU. 

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