If you have $10,000 to invest after paying off your debt and creating an emergency fund, there is a world of opportunity in today’s market. The key here is patience. We could be settling into a bear market, and it might not stop until interest rates start to come down. But you can’t time the market, so if you see some great deals today, you don’t want to miss the opportunity to buy them.
Fintech is a sector that has been hit hard in this market. Financial services companies are being hit hard by macroeconomic shifts, and tech stocks, which often command high valuations, have faltered in an environment that favors value over growth. If you focus on the big picture, however, many of these companies have winning, high-growth businesses that should benefit shareholders in the long run. PayPal Credits (PYPL -2.28%) and Global-e online (GLBE -7.35%) are two of my favorite stocks with huge long-term potential.
The original digital payment company, PayPal, hasn’t given up on its leadership position. It has upgraded, acquired, and improved its way to stay on top of this industry, and it can stay there comfortably for many years to come.
2021 has been an incredible year for the company as spending picked up and digital spending skyrocketed. Even though digital shopping was growing at a fair pace before the pandemic, its acceleration has given a huge boost to PayPal’s business. PayPal was in an excellent position to handle the influx, and its annual results tell the story. Total Payments Volume (TPV) grew 33% year-over-year in 2021 to $1.25 trillion, revenue grew 18% and non-GAAP earnings per share generally recognized) increased by 19%. It also added 49 million new net active accounts to the platform, more than the entire population of Canada, in just one year.
It followed continuous growth in the first quarter of 2022. POS increased by 13% compared to the first quarter of 2021 and revenue increased by 7%. The outlook for fiscal 2022 has offended investors and sent the stock plummeting. But although growth is slowing, PayPal is well positioned for long-term success.
It has 429 million users and expects 10 million new net active accounts in 2022. That’s a tough lead to compete with, giving it a strong moat. Compare this with To block’s 44 million active Cash App users. These assets also increase engagement, creating organic growth.
Management has been actively adding new services, such as a new business credit card and monthly payment option, both launched in June.
Shares of PayPal have fallen more than 60% this year and are trading at just 25 times earnings over the past 12 months. It looks like a great option to take care of its future growth prospects.
Global-e is in many ways a completely different type of business from PayPal. It’s early in its journey, it’s not profitable yet, and in its current form it’s focused on a niche. At the same time, it is a leader in its relatively new industry and it accumulates the number of customers, shows strong growth and adds value to its services.
The company operates in cross-border digital payments, providing an integrated platform for e-commerce businesses. Once installed, buyers see the ability to ship to over 200 destination countries and have the ability to pay in over 100 currencies. It also offers all kinds of data analysis and marketing tools and works with many other e-commerce solutions. He claims that companies are seeing more than a 60% increase in sales after implementing his technology.
It’s still a fairly small company, with $275 million in 12-month sales, but it’s growing rapidly. Sales increased 65% year-over-year in the first quarter of 2022, and gross merchandise volume increased 71%. It’s signing new clients, such as Adidas and Brooks Brothers, and has an agreement with Shopify. Last week, it announced that it was buying competitor Borderfree from pitney-bowes, with whom it will maintain a relationship of mutually beneficial services. E-commerce is expected to grow from just under $5 trillion in 2021 to nearly $7.4 trillion by 2025 according to eMarketer, and online sales are expected to account for more than 23% of all eCommerce sales. here there. Global-e’s market opportunity is huge and it is poised to dominate its field.
Global-e stock is down 68% in 2022 and the stock isn’t cheap even at this price, trading at nearly 13 times past 12-month sales. The price-to-sales ratio will naturally decline as it absorbs Borderfree’s business, unless prices spike at the same time, an unlikely event in this market that investors are unlikely to protest. But the company has enormous potential and it is making the right choices. The decline in the stock price provides an opportunity to buy the stock before the market recovers.