These 2 high-growth stocks could fuel the next record-breaking bull market run

Growth stocks have fallen out of favor over the past month; many have fallen noticeably above highs, and investors are trying to determine when there might be a rebound. But when the going is dark, the winners often lead the comeback and drive the market up.

Both of these stocks have been big winners since the pandemic lows of March 2020 and still have the growth and fundamentals to continue pushing higher. They could fuel the next market bull run.

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To block

Money and the way it moves between consumers and businesses evolve, and the fintech society To block (NYSE: SQ) (formerly Square) is at the forefront of this evolution. Its point of sale (POS) terminals and software have made it easier for small businesses to accept digital payments than ever before, while its Cash App ecosystem disrupts the traditional relationship between consumer and bank.

Banks have been around for centuries and are built on outdated “DNA”, so to speak. They have physical branches that are expensive to operate and are slow to embrace change. The average bank spends a lot of money on acquiring a new customer – the amount can range from $ 1,500 to $ 2,000.

Block is a digital business model; users only need to download Cash App on their phone to access all of its features. The company can acquire customers for as little as $ 5, giving it a significant financial advantage over traditional banks.

The company tracks gross profit growth as its primary indicator of company performance because Bitcoin Cash App transactions can skew revenue growth figures. In Q3 2021, Block’s gross margin increased 43% year-on-year to $ 1.13 billion, with the POS ecosystem and the Cash app contributing almost equal amounts.

Cash App could become Block’s main activity in the years to come; it recently opened up to teens in the United States between the ages of 13 and 17, a demographic of around 20 million. Cash App is also aggressively marketed to millennials with the goal of building a financial relationship with individuals earlier, so that it can be profitable when they are entering their prime earning years.

The block acquires After payment, a Buy Now, Pay Later (BNPL) company, for $ 29 billion in shares to add as a feature for Cash App users. This is another tool that could attract young users to the Cash App ecosystem. BNPL is a rapidly growing consumer credit segment that could grow 15-fold from its current size by 2025.

Block’s stock is trading at nearly $ 180 in 52 weeks, down more than 30% from its highs. The stock’s price-to-sell (P / S) ratio is just over 5, its lowest since the height of the pandemic. However, I think this $ 78 billion market-cap company is still fundamentally strong and performing enough to help fuel the indexes should a leak occur.

Limited sea

The people of Southeast Asia are among the most internet-savvy in the world, which has made it a gold mine for the Singapore-based internet company. Limited sea (NYSE: SE). The company operates a three-headed business model that includes gaming, e-commerce and fintech segments.

Sea has grown its turnover by an average of 71% per year over the past five years, thanks to a Southeast Asian customer base of 670 million people who are young (50% of the population under 30 years old) and spend an average of eight hours per day connected online.

Its game segment created Freefire, one of the world’s most popular mobile games, and is the company’s main cash cow. In Sea’s third quarter 2021, gaming generated nearly $ 1.1 billion in revenue, of which $ 715 million went into EBITDA (earnings before interest, taxes, depreciation and amortization). The profitability of the gaming business helps finance investments in unprofitable segments of e-commerce and fintech.

The investment of its gaming profits in the business has allowed Sea Limited to aggressively expand into new markets like Latin America, Poland and India. Freefire is also a great corner; its popularity in these new markets helps Sea to link its e-commerce business with advertisements and promotions to attract customers.

During the pandemic, Sea was a big winner, rising from nearly $ 50 to $ 372 before the recent pull-out brought the shares down to around $ 222. Sea is just starting to gain traction in these new markets, so the company could see continued revenue growth for the foreseeable future. The stock has a market cap of $ 123 billion, which is why I think Sea’s strong growth could help push the market higher when it hits new highs.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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