Success often comes down to adapting, finding new ways to serve customers, expanding into fresh markets, and staying one step ahead of competitors.

CompoSecure (CMPO) has built a dominant position in the premium metal payment card market, serving major clients like JPMorgan Chase and American Express.

The company is expanding into digital assets with its Arculus product, a secure and user-friendly solution for managing cryptocurrencies and NFTs.

While the market expects competition to pressure its high returns, CompoSecure’s ability to adapt and innovate positions it to thrive at the intersection of traditional finance and digital assets.

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Success often comes down to adapting, finding new ways to serve customers, expanding into fresh markets, and staying one step ahead of competitors.

It’s not just about improving what you already do; it’s about thinking bigger, trying new things, and making bold moves to grow.

The ability to change while holding onto what makes a company great separates those who thrive from those who fall behind.

Transformation isn’t easy, but it’s one of the only ways to stay competitive.

This mindset of transformation has been the driving force behind CompoSecure’s (CMPO) success.

The company specializes in designing and manufacturing payment cards for major U.S. issuers and holds over 80% of the market share in the premium metal card segment.

With clients like JPMorgan Chase and American Express, CompoSecure has built a solid niche in the secure payment solutions space.

The company recently expanded its partnership with Fiserv to market and resell its Arculus Authenticate product.

This move diversifies its offerings beyond payment cards and positions the company to tap into the growing digital asset market.

Arculus provides users with a secure and user-friendly method to store and manage their cryptocurrencies and NFTs.

Unlike traditional hardware wallets that often require cables or complex setups, Arculus uses a sleek metal card with Near Field Communication (NFC) technology.

Users can access their digital assets by tapping the card against their mobile device, making the process simple while maintaining strong security measures.

Security is crucial in digital asset management, and Arculus uses a three-factor authentication system: biometric verification, a PIN code, and the physical Arculus Key Card.

Since its launch, CompoSecure has continually improved Arculus’s features to meet the diverse needs of digital asset holders.

Recent updates include support for NFTs, integration with WalletConnect, and expanded cryptocurrency support, allowing users to manage a wider range of digital assets within a single platform.

CompoSecure’s move into the digital assets sector is strengthened by strategic partnerships.

The company’s collaboration with Fiserv, a global provider of financial services technology, aims to market and resell Arculus’s authentication solutions.

This partnership is expected to enhance Arculus’s market reach and adoption, leveraging Fiserv’s extensive client network.

The increasing use of digital assets has increased the need for secure storage solutions.

High-profile security breaches and the rise in cryptocurrency adoption have made people more aware of the importance of protecting digital wealth.

Arculus addresses this need by offering a solution that combines the security of cold storage with modern technology, catering to both new and experienced users.

All these factors combined enabled the company to achieve a 77% Uniform return on assets ”ROA” and 23% asset growth last year.

However, the market is concerned about increasing competition in the digital asset space.

We can see this through our Embedded Expectations Analysis (“EEA”) framework.

The EEA starts by looking at a company’s current stock price. From there, we can calculate what the market expects from the company’s future cash flows. We then compare that with our own cash-flow projections.

In short, it tells us how well a company has to perform in the future to be worth what the market is paying for it today.

At the current stock price, the market predicts that the company’s Uniform ROA will fall to around 20%.

By leveraging its expertise in secure payment solutions and adapting to emerging market demands, CompoSecure is well-positioned to capitalize on the growing intersection of traditional finance and digital assets.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research