DST Systems (DST) is the leading provider of information processing and computer software to the financial services industry. It specializes in shareholder and portfolio accounting, network management and customer communication mailings for clients such as mutual funds, investment firms and insurance companies.

The rebounding stock market has helped increase sales for DST, but a large portion of its growth potential lies outside the U.S. As mutual-fund-type investments gain popularity overseas, DST's market-leading position will help it capitalize on the trend.

DST's shares are up more than 60% over the past 12 months, but Value Line says it still holds plenty of appreciation potential for the next three to five years. The company recently bought the majority of Janus Capital's one-third stake in the company -- a move analysts say will strengthen DST's financials.

The stock trades at 19 times 2004 consensus earnings estimates of $2.36 per share, according to Thomson First Call. That's a significant discount to DST's average annual P/E ratio of 33. Value Line notes that DST's volatility rating is above average, making the shares suitable only for risk-tolerant investors.

--Erin Burt

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