The Western Union Company (WU), Moneygram International Inc (MGI), Xoom Corp (XOOM): For This Trio, Forget China And Think Mexico

The Upstart

One area that both Western Union and MoneyGram are highlighting is the use of the Internet to send money. That’s a great opportunity, but also a wide open field. That makes it a double edge sword, since it offers a new way to serve customers but also a new way for competitors to steal market share.

For example, Xoom Corp (NASDAQ:XOOM) offers online transfers and is growing its business quickly. In fact, the company’s quarterly revenues have grown 50% over the last year alone. While that’s from a small base and the company still doesn’t make money, it shows the potential this upstart has to offer investors and the trouble it could cause the old guard.

Plus, without the weight of physical operations, Xoom Corp (NASDAQ:XOOM) faces virtually no cost to add new customers to its systems. That makes competing on price a lot easier, particularly as the world increasingly accepts online transactions as safe. Growth investors should take a close look at Xoom Corp (NASDAQ:XOOM)’s business, since price is a key factor in the money transfer space.

More than Mexico

While each of the companies above provide services throughout the world, Mexico is a key market. The Western Union Company (NYSE:WU) has stumbled badly in the country, giving Moneygram International Inc (NASDAQ:MGI) an opening to gain market share. Xoom Corp (NASDAQ:XOOM), meanwhile, is pushing hard to gain traction with digitally savvy customers. Any weakness at its larger brethren is an opening.

Xoom Corp (NASDAQ:XOOM) and MoneyGram are most appropriate for more aggressive investors because neither is profitable at this point in time. Western Union, though struggling at present, has the most appeal for dividend seekers because its brand name still carries a great deal of weight with customers.

The article For This Trio, Forget China And Think Mexico originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Western Union. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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