Pat McKeough responds to many requests from members of his Inner Circle for specific stock market advice as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday.

Recently an Inner Circle member asked us about a Canadian company that owns and operates over 20,000 Automated Teller Machines (ATMs). Direct Cash Payments has a dominant position in several Commonwealth countries as the largest ATM operator in Canada and Australia and the third-largest in the United Kingdom. Pat looks at the company’s potential for expansion, the risk of its growth-by-acquisition strategy and the safety of its high-yielding dividend.

Q: Pat: I would appreciate your thoughts on a relatively small company called DirectCash Payments. Thanks.

A: DirectCash Payments Inc. (symbol DCI on Toronto; www.directcash.net) is the largest non-bank owner and operator of automated teller machines (ATMs) in Canada and Australia and the third-largest in the U.K. It also operates ATMs in Mexico and New Zealand.

In addition, DirectCash serves credit unions and other small financial institutions that outsource their ATM transactions.

The company now has 20,231 active ATMs, up 3.6% from 19,536 a year ago. Its machines processed 31.6 million transactions in the latest quarter, up 11.8% from 28.3 million.

In the quarter ended September 30, 2014, DirectCash’s revenue rose 22.2%, to $71.7 million from $58.7 million a year earlier. Cash flow per share gained 4.6%, to $0.68 from $0.65.

New acquisition adds 1,325 new ATMs in Australia

After the latest quarter ended, the company completed its acquisition of Ezeatm Limited, adding 1,325 ATM sites to its already-dominant market position in Australia. DirectCash paid $13.4 million Australian ($13.2 million Canadian).

DirectCash’s $195.0 million of long-term debt is a high 65% of its $298.1-million market cap—but its debt is down from $231.8 million at the end of 2013.

The company’s growth by acquisition adds risk, but it sees lots of opportunity to expand through small purchases in Australia and Europe. The stock yields a high 8.7%, and the dividend appears safe.

We view DirectCash Payments as a hold, but for aggressive investors only.