Biometric passwords are about to go big time and investors should prepare; the goal is to use the sophisticated sensors inside smartphones to do away with passwords once and for all, asserts growth stock expert Jon Markman, editor of Strategic Advantage.

Facial recognition, fingerprint scans, voice prints and even physical security keys can do the job faster and better.

Diebold Nixdorf (DBD) may not be top of mind when investors think about cutting edge authentication devices. Today, the 160 year old company is best known for its 35% global market share of automated teller machines.

Machines that spit out cash may seem passé in a world of cryptocurrencies, Apple pay, and facial recognition, however 85% of all global transactions are still conducted using cash.

And 75 million people interact with systems from the Canton, Ohio, company every day, thanks to its partnerships with 90 of the top 100 global financial institutions.

More important, Diebold is leveraging those networks, and progress being made by smartphone makers, to take innovative biometric authentication mainstream.

And as the retail sector moves aggressively toward self-checkout, Diebold is ready. New machines with touchscreens accept and dispense cash. They allow payments for coffee, soda and other snacks sold in convenience stores and fast food restaurants. All of the verification is biometric.

Diebold managers like to make the argument they are filling in the dots between the physical and digital worlds. That’s a good way to look at it.The company has 1,900 software engineers and 3,000 patents. It’s also ramping up research and development spending.

Diebold spent $156 million in 2018 making better software and pushing ahead with connected commerce, a system that allows bankers and retailers to glean insights about customer behavior from Diebold devices in the field. The initiatives are working.

Diebold shares trade at 14.9x forward earnings and 0.24x sales. They have been a big winner, rising 450% in 2019. Given that the business is entering a new product cycle, these metrics are cheap. Growth investors should consider buying the first meaningful pullback.

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