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This 170% IPO Winner Still Has Plenty of Room to Run

The year is almost over, and two things we can say about the market in 2013 is that stocks demonstrated stellar performance (the S&P 500 is more than 26% year to date), and it was a great year for the IPO market.

According to research firm Dealogic, in the first 11 months of 2013, there were 218 companies that were brought to market via IPO. Those deals raised some $56 billion, which was the most since 2007, when a total of 288 IPOs generated $63 billion.

Sure, there was the high-profile tech IPO winner Twitter (TWTR), and the well-known retailer The Container Store (TCS), and both stocks are up nicely since their respective debuts, gaining 15% and 11%, respectively.

However, these IPOs pale in comparison to one of the best IPOs in recent years, Russian electronic payment systems operator Qiwi (QIWI).

Now, if you didn't know that Russian electronic payment systems would be such a big hit with Wall Street, then join the club. Like many others, I had never heard of this company before it went public in May. But I sure know about it now. Since its May 3 debut at $17, it has surged 170% in just over seven months to about $46.

QIWI Stock Chart

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This kind of price spike is driven by a lot of fast money buying momentum, and it's also fueled by big money accumulation in the shares. Identifying stocks with these bullish characteristics is something traders need to take note of, and take advantage of, in order to ride the biggest winners higher.

Yet QIWI isn't just a momentum stock. In fact, there are plenty of fundamental positives helping to lift shares.

On Nov. 19, the company reported better-than-expected Q3 results. Revenue was an impressive $50.2 million, up 49% from the year-earlier quarter and well above consensus forecasts for $40.6 million.

Bottom-line performance was equally impressive, with adjusted earnings per share (EPS) of $0.35. The earnings number was 39% better than the prior year and handily beat estimates of $0.25.

More fundamental positives came from the company's outlook. The provider of nonbank self-service payment kiosks in Russia and other former Soviet Republic states said it anticipated revenue for the year would climb 42% to 45%, up from its previous guidance of 27% to 30%. The company also said it expected adjusted net profit to increase by 50% to 55% versus earlier guidance of 35% to 40%.

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Want more positives? Well, there's the recent deal with stalwart payment provider Visa (NYSE: V) to offer a product called the Visa Qiwi Wallet, which enables customers to use their cellphones to make online purchases and to pay bills.

Finally, perhaps the biggest driver for QIWI is fear.

According to Investor's Business Daily, the company's growth has been "fueled by worries about credit card fraud in Russia, which has prompted more than 90% of Russians to pay bills or make purchases with cash, either by kiosk or by cellphone."

So, by providing a service that's both trusted and widely used, QIWI has become the go-to way to conduct business safely in Russia and its former satellite nations.

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Recommended Trade Setup:

-- Buy QIWI at the market price
-- Set stop-loss at $42.22, approximately 8% below the current price
-- Set initial price target at $57.50 for a potential 25% in three months

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