Western Union (WU ) (WU) was founded in 1851 as a telegraph operator. But its new stock, which began trading on the Big Board on Sept. 20 after being spun off by First Data (FDC ), is all about one of today's hottest trends: immigration. Western Union, which offers transfers money at 285,000 offices worldwide, accounted for 37% of First Data's revenues, says Standard & Poor's (MHP ). WU stock opened at 18 and is now at 21.85. First Data shareholders got one share of WU for each First Data share. Since WU is one of the best-known brands, says S&P, First Data stockholders may stick with WU and sell First Data. "Our share of the money-transfer business has risen from 10% to 18% in four years," says CEO Christina Gold. WU aims to focus on Latin America, Africa, and South Asia for further growth, she adds. Merrill Lynch (MER )'s Gregory Smith, who rates WU a "buy," says it will continue to benefit as more people migrate abroad seeking opportunity. WU recently sued Arizona for seizing transfers of $500 or more bound for Mexico on suspicion of terrorist financing. WU has won a temporary stay on such seizures. Smith figures WU, which reported third-quarter profits of $258.1 million, or 34 cents a share, vs. a consensus forecast of 28 cents, will earn $1.17 in 2006 on revenues of $4.4 billion, $1.13 in 2007 on $4.9 billion, and $1.28 in 2008 on $5.4 billion. Franco Turrinelli of William Blair (it has done banking for WU) says immigration issues are already reflected in the stock; he rates it "outperform."

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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