Is Adyen the best payment processing stock to buy?

Adyen (OTC:ADYE.Y) isn’t a household name for most US investors, but it should be. The Netherlands-based fintech is becoming a leader in payment processing, especially among large enterprises. In this crazy live Video clip, recorded on January 27Fool.com contributors Matt Frankel and Lou Whiteman explain why Adyen is a stock investors should put on their radar.

Matt Frankel: Guys, what do you think of Adyen currently? Business-wise, I think they’re one of the best in class when it comes to operations, finances, and tailwinds. But even after a decent drop, it’s a crime to call it reasonably priced. Thoughts?

Well, I don’t necessarily agree that it’s a crime to call it reasonably assessed, and I’ll tell you why. If you are unfamiliar, Adyen is a payment processor. They are based in the Netherlands, which is why many Americans haven’t heard of them. They are truly a global payment processor, so their volume is right between Square (NYSE:SQ) and PayPal (NASDAQ: PYPL), so they are large. They focus on big traders. They don’t really have a consumer-oriented business, which is why a lot of Americans haven’t heard of it either. Their customers include companies like Microsoft (NASDAQ: MSFT), Etsy (NASDAQ: ETSY), Uber (NYSE: UBER)the big ones, eBay (NASDAQ:EBAY). If you recall, a few years ago eBay dropped PayPal as their primary payment processor, which did a lot of news in favor of Adyen.

No other payment processor has attracted large corporations as much as Adyen. They do it profitably and they do it all over the world. The United States accounts for about a quarter of their income and is climbing. I like Adyen, I think, if you want overseas exposure. Of course, there are other dynamics at play such as currency risk, as most revenue is not in US dollars. But if you want a payment processing company that isn’t Square or PayPal, this is the one to definitely look at.

Lou Whiteman: Much more integrated, too, with these big companies, as you mentioned. I mean, Square has craft roots and PayPal, mostly small businesses. Adyen has a lot of really big customers – the one stop shop whether or not it’s point of sale or online. I say, I’ll tell you without going there — because this goes way beyond fintech, so I’ll be brief, but valuation is a weird topic right now. I hear it a lot on Motley Fool Live sometimes in terms of, I hated this idea of, well, this or that company was at this value. The company has not changed, we will come back to this. I hate this analysis because it doesn’t even take into account that maybe it was a mistake three months ago.

But where I think it works is if that’s when you need to start looking at the total addressable market and see what’s out there. Adyen, I think, is pretty early in a huge land grab with multiple winners, but they’re coming to the United States. I think Dick Sporting Goods (NYSE:DKS), you will see them arrive in new markets. The other big catalyst there is, honestly, like, Matt, like you say people don’t know if they just decide to get a listing in New York I think that would be a huge catalyst to go up upper. I really like this company. I don’t own it, but this is the one I keep looking at, saying, why doesn’t he own it?

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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