Immigrants and migrant workers are good business for this financial transaction processor. By Andrew Tanzer, Senior Associate Editor August 4, 2006 The business of immigrants without bank accounts transferring funds domestically, or remitting money back home, is a big one. Western Union, which began life as a telegraph company in the mid-19th century, plays a major role in that process. A subsidiary of First Data Corp., Western Union is king of the global non-bank money transfer industry. Now, First Data (symbol FDC) is planning to spin off Western Union in the fourth quarter, a move that Barbara Wachli, manager of Aquila Rocky Mountain Equity fund, thinks will unlock value in the Greenwood Village, Colo., company's shares.Western Union caters to migrant workers lacking a bank account and often seeking anonymity in transferring cash. Half of its business doesn't involve the U.S. Money transfers to China, India, Mexico and the Philippines are soaring. "Everybody is in motion these days," says the Arizona-based Wachli. For that convenience and service, Western Union extracts relatively high fees, and is able to put to work an enormous cash float. Revenues are expanding 15% to 20% a year. The division's operating profit margin (profits from operations divided by revenues) is a lush 31%. And the business generates copious free cash flow (the cash profits that are left after making the necessary investments to maintain the business). First Data is also a leading processor of credit card transactions. Wachli notes that, unlike the consumer-oriented Western Union business, the credit-card processing operations cater to financial-services providers, such as Wells Fargo, that may compete with First Data in the consumer money-transfer business. Thus, she sees strategic and diplomatic benefits in the plan to set free the Western Union division, which will be headed by Christina Gold, a former Avon executive. First Data stock trades at about $42, or 18 times analysts' average 2006 earnings estimate of $2.32 per share. Based on her 2007 earnings projections, Wachli thinks that Western Union alone could be worth $34 a share and the rest of First Data $26. Add that together and you get a $60 stock.