Recently I came across these two stocks, that both start with the same letter, and sound very similar when spoken aloud. But they have three other things in common, as well: one, that they are not well-known at all; two, that they are growing their businesses, with strong competitive advantage; and three, they look to have very good prospects as longer-term investments.
- Cuscal (CCL, $3.04)
Market capitalisation: $582 million
12-month total return: n/a
Three-year total return: n/a
Expected FY26 (June) dividend yield: 3.6%, fully franked (grossed-up, 5.2%)
Expected FY26 (June) price/earnings (P/E) ratio: 13.6 times earnings
Analysts’ price target: $3.50 (Bell Potter), $3.75 (Ord Minnett)
Payments infrastructure provider Cuscal is a great business that is not widely known. The company was created by the Australian credit-union movement in 1997 — the full name was Credit Union Services Corporation (Australia) Limited — to provide the infrastructure and services enabling member credit unions’ access to the payments network, and to issue products under licence such as Visa cards. But Cuscal’s predecessor entity began providing B2B payment processing services to banks, credit unions and companies in 1966.
The company came to the ASX through an initial public offering (IPO) at $2.50 a share in November 2024, raising about $337 million. The IPO saw existing shareholders, including Mastercard, Bendigo and Adelaide Bank, and a range of credit unions, selling down their stakes. The shares have moved to $3.04.
Cuscal is a business-to-business (B2B) provider meaning that it provides payments infrastructure services to other businesses like banks, “fintechs” and corporates; who, in turn, provide payment services and experiences to their customers through their applications and consumer interfaces
Cuscal allows its users to process credit and debit cards, payments from digital wallets like Apple Pay and Google Pay, overnight batch processing, and cash withdrawals from ATMs (it launched Australia’s first ATM in the 1970s.) Cuscal’s rediATM is one of Australia’s largest ATM networks, offering direct charge-free transactions for customers of more than 100 financial institutions.
Cuscal was one of the founding financial institutions that established the New Payments Platform (NPP), Australia’s decentralised, real-time payment system, in February 2018: Cuscal enabled over 60% of the financial institutions that were live on Day 1 of the NPP. The NPP connects more than 100 banks, financial institutions and fintechs, facilitating around $5 billion of payments each day, with money moving securely between bank accounts in seconds.
Cuscal was then the first to launch PayTo capability to the market, making it possible to use the new payment services that provide real-time account-to-account payments. PayTo enables third-party payment initiation from bank accounts, meaning that consumers and businesses can make virtually instant account-to-account payments.
As well as payments, Cuscal provides services around ‘regulated data,’ which is information that is protected by local, national, or international statute or regulation mandating certain restrictions. It is at the forefront of collecting, sharing, managing and storing data that is subject to Consumer Data Right (CDR) legislation. Cuscal offers its clients solutions for managing and sharing data under the CDR regime, acting as both a data holder and a data recipient, enabling clients to connect to the CDR infrastructure. Given its responsibilities and its central position in the nation’s payments infrastructure, the company is heavily regulated: it is required to hold $200 million of regulatory capital on its balance sheet. The company also has an advanced data-driven fraud monitoring platform that leverages AI and machine learning to process large amounts of data and identify high-risk card and real-time payment transactions.
About two-thirds of revenue comes from Issuing: Cuscal is a major player in the card issuing market, with more than 7 million debit, credit and prepaid cards under management. Payments generates about 17% of revenue, with the rest coming from Acquiring, providing the infrastructure for the merchant acquirer to accept a payment from a payer. The main driver of Cuscal’s revenue is transaction volume rather than transaction value.
It is a growing business, as card payments increase, and open banking allows fintechs and neobanks to compete on an equal footing. Cuscal helps them connect into Australia’s payments system. Cuscal sits right in a sweet spot, where payments, data and digital identity converge. And there are significant barriers to entry protecting its business.
In FY24, Cuscal brought in $273.3 million of revenue, adjusted net profit of $36 million, and paid a fully franked dividend of 5 cents a share. For the financial year that ended yesterday, broker Bell Potter expects revenue of $291.7 million, adjusted net profit of $38.6 million, and a fully franked dividend of 10 cents a share. By June 2027, Bell Potter expects Cuscal to be generating revenue of $336 million; reporting a net profit of $47.6 million; and paying a fully franked dividend yield of 12.4 cents. Bell Potter has a price target on the stock of $3.50; Ord Minnett’s target price is $3.75.
- COSOL (COS, 63.5 cents)
Market capitalisation: $116 million
12-month total return: –47.3%
Three-year total return: 5.7% a year
Estimated FY26 (June) dividend yield: 4.4%, fully franked (grossed-up, 6.3%)
Estimated FY26 (June) price/earnings (P/E) ratio: 11.3 times earnings
Analysts’ consensus price target: $1.01 (Stock Doctor, two analysts), $1.01 (FN Arena, two analysts)
Listed in 2020, COSOL offers its clients a fully integrated, end‑to‑end asset management service helping them to manage heavy assets, a description that covers assets as diverse as power plants, mining equipment fleets, defence systems and transport infrastructure. COSOL’s value proposition is to use technology, data, and its deep industry expertise to help organisations that manage a lot of such assets optimise the performance, reliability, and lifecycle of their assets.
The core business of COSOL is to help its clients reduce costs through better asset management, saving them money by showing them ways to manage each asset more effectively, helping them to achieve economic and sustainability improvements in their equipment maintenance, operations and supply chain.
The company has clients from across the natural resources, energy and water, infrastructure, government and defence industries, spread across the Asia-Pacific region, North America, Europe, the Middle East, Africa, and other international markets.
Major asset owners want to implement digital technologies to deliver cost efficiencies while driving productivity improvements, and drawing on its expertise and end-to-end solution capabilities, COSOL is the first provider of asset-management-as-a-service (AMaaS) – a complete outsourced solution for asset management operations.
COSOL uses AI machine learning (ML) to identify early signs of asset degradation through predictive monitoring, enabling condition-based and predictive maintenance, to prevent failures before they occur; deliver real-time insights into the ‘health’ of assets; reduce manual inspections, and human error. In this way, asset-owning organisations can modernise their maintenance strategies and derive quantifiable improvements in operational performance.
Since listing in 2020, COSOL has grown its capability including building its own proprietary IP, and made
targeted acquisitions to build capability to deliver all-embracing data analytics drive asset management
services. The company’s strategy is to ‘digitise’ its customers’ asset networks and using data analytics and AI to extract efficiencies; and in so doing, become a long-term partner with customers – the strategy is that existing customer relationships evolve into multi-year managed-services and AMaaS contracts. COSOL has demonstrated that its model is scalable and operates well globally, giving it huge growth opportunities and the ability to build dominant positions in new markets, as it leverages its platform.
Revenue grew by 35% for the year ending June 2024, to $101.9 million, and net profit increased almost 7%, to $8.5 million. The company has guided for revenue growth of approximately 16%–19% in FY25, with underlying EBITDA (earnings before interest, tax, depreciation and amortisation) in the range of $17.3 million–$17.7 million, delivering second-half growth of 12%–15%. Analysts expect a slight slip in net profit for the year ending June 2025, as COSOL absorbs some acquisitions, but a 30%-plus growth in profit in FY26. There is also a healthy fully franked yield on offer, to augment the total-return prospect.
