Global macro growth concerns are keeping markets on edge to some degree, and that is making it very tough for some sectors to fight their way out of the current trading levels. The problem for many investors as we enter what is called the “late cycle” for the markets, is finding sectors with solid upside potential.

In a new research report Oppenheimer feels that the information technology services area is one the can be a late cycle outperformer for investors. The report cites the services-focused business models, improving earnings expectations and, most importantly, reasonable valuations for the top companies.

Oppenheimer likes six companies in the sector, and we picked four that are triple play rated. The triple play stocks are rated Outperform and have a positive MAER rating, which analyzes trends in revisions to the consensus estimates alongside price and fundamental information. Lastly, the stocks have an attractive technical profile.

Cognizant Technology Solutions

This tech stock is well-liked across Wall Street. Cognizant Technology Solutions Corp. (NASDAQ: CTSH) provides information technology (IT) consulting and business process outsourcing services worldwide. It operates through four segments: Financial Services; Healthcare; Manufacturing, Retail, and Logistics; and Other. And it offers consulting and technology services, such as IT strategy, program management, operations improvement, strategy and business consulting services.

Though Cognizant is based in the United States, it primarily uses an offshore workforce in India. The company is well positioned for a variety of trends in IT services, and many expect it to increase earnings well in excess of the industry average. Its solid second-quarter results that were broad based. In addition, the company raised second-half guidance and is a solid conservative technology holding to add.

The Oppenheimer price target for the stock is $76. The Thomson/First Call consensus target is $74.80. Shares closed trading on Wednesday at $64.97.

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Fidelity National Information Services

This company has been on fire all year and still has solid upside potential. Fidelity National Information Services Inc. (NYSE: FIS) is a global leader in banking and payments technology, as well as consulting and outsourcing solutions, and serves more than 14,000 institutions in over 130 countries. It provides state-of-the-art software, services and outsourcing of the technology that empowers the financial industry.

The company recently completed a huge successful debt offering to help complete the $5.1 billion purchase of SunGard that was announced in August. The debt was sold together with borrowings under the new term loan credit agreement, and its existing revolving credit facility and cash on hand, to pay the cash portion of the consideration for the acquisition. Wall Street loves this deal as it further strengthens the company’s financial services presence.

Fidelity National customers are paid a 1.5% dividend. The Oppenheimer price target is $80, and the consensus target is at $78. The stock closed most recently at $69.73.

Fiserv

This is another top IT services provider with positive upside potential. Fiserv Inc. (NASDAQ: FISV) is a leader in financial services technology and enables clients to achieve best-in-class results by driving quality and innovation in payments, processing services, risk and compliance, customer and channel management and business insights and optimization.

The company’s Payments and Industry Products segment provides debit, credit and prepaid card processing and services; electronic bill payment and presentment services; Internet and mobile banking software and services; person-to-person payment services; and other electronic payments software and services. This segment also offers card and print personalization services, investment account processing services for separately managed accounts, and fraud and risk management products and services.

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The Financial Institution Services segment provides account processing services, item processing and source capture services, loan origination and servicing products, cash management and consulting services, and other products and services that support various types of financial transactions.

The $95 Oppenheimer price target is higher than the consensus target of $90.29. Note that Wednesday’s close was $92.59.

Global Payments

This company participates in the fast growing payments arena. Global Payments Inc. (NYSE: GPN) is a leading worldwide provider of payment technology services that delivers innovative solutions driven by customer needs globally. Its partnerships, technologies and employee expertise enable it to provide a broad range of products and services that allow our customers to accept all payment types across a variety of distribution channels in many markets around the world.

Global payments recently announced it could offer its merchants in the United States the ability to accept Samsung Pay, a simple and safe mobile payment service that works almost anywhere one can swipe or tap a card. As a Samsung Pay-qualified payment provider, Global Payments’ robust suite of payment solutions is fully enabled for acceptance, allowing merchants to offer their customers the convenience of Samsung Pay.

The Oppenheimer price target is $136, and the consensus target is $133.91. Shares closed Wednesday at $131.23.

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The electronic payment business and financial IT services offerings are continuing to evolve and grow. All these companies have had good years in the face of a very sloppy market. Investors may want to nibble at shares and look for a pullback to add more.

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