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Wright Express ( WXS)

Company Profile: Wright Express provides fleet charge cards and information services for car, van and truck fleets throughout the U.S.

Share Price: $53.25 (Dec. 6)

2011 Return: 15.8%

Investment Thesis: Wright Express plays on one of William Blair's investing trends for 2012: Prepaid cards.

"Wright Express appears to be gaining good traction with its prepaid card initiative," the analysts write. "We believe prepaid could be a significant new growth area for Wright Express given the cross-selling opportunity it has with its core customer base. We believe Wright Express's scalable infrastructure and closed-loop network gives it a sustainable competitive advantage."

The analysts expect Wright Express's other payments solutions segment, which accounted for 23% of third-quarter revenue, to continue to be strong.

"Wright Express accelerated international investment over the past several years and completed a highly accretive acquisition in Australia in 2010," the analysts write. "Wright Express is working on many new growth initiatives, which gives us confidence in the long-term outlook. We believe an accretive acquisition, likely international, is possible in the near term."


Higher One Holdings ( ONE)

Company Profile: Higher One offers integrated financial aid disbursement services for universities. The company provides services to about 5.8 million students, ensuring they receive financial aid refunds quickly, can pay tuition and bills online, make on-campus and community purchases.

Share Price: $19.99 (Dec. 6)

2011 Return: -1.2%

Investment Thesis: William Blair analysts say they like Higher One because the company has an attractive, predictable business model with high incremental margins and solid cash flow conversion. It also helps that management recently said that the company's pipeline "remains extremely robust."

"We believe there could be upside down the road from the company increasingly being viewed as a true bank alternative (e.g., more direct deposit), through acquisitions, by monetizing the graduate opportunity, and as a takeover candidate," the analysts write.

However, there is high short interest in Higher One's stock -- William Blair analysts say it would take about 30 days to cover. That's due to a number of unresolved headwinds, including competition, fees, potential cuts in Pell grants, slowing enrollment growth in the U.S. and a bank partner.

While finding a bank partner is the biggest question market, William Blair analysts say that a positive announcement, which could come in the next three months, would be a huge catalyst, especially considering the massive short interest.

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