The market is pretty much a popularity contest, it takes turns hating and loving different stocks on any given day, for many reasons. You shouldn’t try to find the logic behind this just focus on picking the unpopular stocks that might one day be the “popular” stocks that everyone buys.
By looking at the fundamentals you can find stocks that could be booming tomorrow. Here are three of them.
The world financial services industry is worth trillions. Until the past decade, the way people spend money has stayed relatively the same.
Marqeta serves a particular purpose in how fintech companies are rapidly blossoming. Marqeta is a platform that lets its customers connect to payment networks that already exist like Mastercard and Visa through its application programming interface. Its technology supports the payments for many applications like Affirm’s debit card, Square’s Cash App, DoorDash transactions, and much more.
The company is getting bigger, it has reported a 56% increase year-over-year in revenue for its third-quarter earnings in 2021. Marqeta’s biggest customer is Square. About 68% of its total revenue comes from Square. This number is coming down slowly due to the fast growth of other customers. Especially those customers in the Buy Now, Pay Later area that Marqeta serves like Sezzle, Affirm, Zip, Klarna, and Afterpay.
The stock went public in June and currently trades far below the $30 share price it started at. Investors may be afraid of Marqeta’s interest in Square, however at a price-to-sales ratio of around 21, a strong customer base, and the stock’s growth it may be worth considering shares.
Since Amazon’s rise more than 10 years ago E-commerce has been popular with growth investors. However, there’s a long way to go for growth in upcoming markets. MercadoLibre has been growing its company in Latin America for almost 2 decades.
The company has many layers to it, including payment/credit services, e-commerce, and shipping and logistics. Each part complements the other, this gives customers a better experience in a place where the people are underfunded or live in areas where stores and amenities are more difficult to find.
MercadoLibre’s growth went up during COVID. Revenues rose 73% year over year during 2020 to just below $4 billion. The company’s revenue grew 66% in Q3 which shows they are having another strong year in 2021. The company is also showing positive earnings-per-share as reinvestment in the business grows.
Other than its growth, over the past year the stock has been down 28%. The growth shows that the company is doing just fine.
Zoom Video Communications could be the ultimate showpiece of the COVID pandemic. This is because the lockdowns made everyone stay inside their homes, so people used Zoom in order to have meetings.
Zoom is known for its technology for video meetings, but it does have other functions like Zoom phone and chat.
The company hit a share price of $559 in late 2020, the stock has now went down to under $200 this is because of the 2020 growth numbers that are almost impossible to top. Zoom products got adopted faster than they would have because of the pandemic. The stock is being punished because investors believe it will grow at a slower pace.
The stock has a P/S ratio of 15 now, which is a sensible valuation. Growth in the mid-teens for 2023 is seen by analysts and EPS growth close to 20% every year for the upcoming three to five years. Zoom is unlikely to deliver life-changing returns to investors, however it can still be a profitable.
Author: Steven Sinclaire