|Bid||78.32 x 1000|
|Ask||78.38 x 800|
|Day's Range||78.42 - 81.70|
|52 Week Range||49.82 - 101.15|
|Beta (3Y Monthly)||2.94|
|PE Ratio (TTM)||N/A|
|Earnings Date||Aug 1, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||82.42|
Square (NYSE:SQ) stock closed trading on June 3 at $60.62. SQ stock is now trading around $80, up over 30% in six weeks.Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsYou would think that, given the run Square's been on, Square stock would be trading at or near its all-time high. Nope. Not even close. SQ stock's all-time high was set in October 2018, when it reached $101.15, around 25% above its current price almost ten months later. * 10 Tech Stocks That Are Still Worth Your Time (And Money) While SQ faces headwinds and increased competition in the payments space, it is continually innovating, creating products that its customers need to compete. According to Citi analyst Peter Christiansen, Square has created 32 new products and features so far this year, one of which, Square Card, its debit card, could go a long way to reigniting its growth.As long as Square continues to innovate, I think SQ stock can test its all-time high, sometime later in 2019 or early 2020. Here's why. Square's Debit Card The launch of the Square Card in January has turned the heads of many of the analysts covering SQ stock. One of those analysts is Raymond James' John Davis, who recently upgraded Square stock from "underperform" to "market perform" based on its debit card, suggesting that the card could generate $100 million in additional revenue in 2020. The Motley Fool's Adam Levy points out that Square's subscription and services revenue only generated $600 million in revenue in its latest fiscal year. That means the $100 million boost generated by Square Card would increase this revenue stream by 17%. Square's subscription and services-based revenue grew by 125% in Q1 to $218.9 million. Now, that's a small number in comparison to its total transaction-based revenue from payment processing, which brought in $656.8 million in Q1. But its subscription and services-based revenue is a lot more profitable than its other transaction-based revenue. In Q1, its transaction-based revenue had a gross margin of 37.7%. Meanwhile, its subscription and services-based revenue's gross margin was 72.4%. As a result, the rapid growth of its subscription and services-based revenue, helped by the Square Card, will meaningfully, positive impact its bottom line. For merchants, the primary attraction of the Square Card is that it's tied directly to their point-of-sale devices, so their revenues is immediately available to pay for business expenses. In other words, they don't have to wait for the money to arrive in the bank to access it. That's cash flow 101. However, SQ also provides a 2.75% rebate to merchants who buy products with the card at any Square payment terminal. The 2.75% rebate will definitely entice many merchants to use the debit card. Merchants who use the card will be promoting SQ every time they make a purchase with it. You can't buy that kind of goodwill. Less than a year old, the Square Card is a winner. Other Analysts Are Upbeat on SQ StockAnother analyst who gave SQ stock the thumbs up was Stephan Biggar of Argus Research. Biggar initiated coverage of Square stock on July 8 with a "buy" rating and a $94 target price. Analysts tend to be very conservative with their price targets, especially when they first initiate coverage of a stock. I wouldn't be surprised to see Biggar raise his price target in 2020 on more good news from Square's debit card. The Bottom Line on SQ StockIn April 2018, I compared Square stock to Twitter (NYSE:TWTR). I wondered which was the better buy. I concluded that because SQ solves more problems than Twitter does, it was the better stock to buy. Nearly a year and a half later, I still feel that way. I believe that Square stock is one of the names that should be bought and thrown in a drawer. In ten years, investors will be amazed by its business. Innovation will continue to drive SQ stock higher. It's a buy, despite its significant gains in 2019.At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Tech Stocks That Are Still Worth Your Time (And Money) * 7 Marijuana Stocks With Critical Levels to Watch * 7 of the Best Smart-Beta ETFs to Target Right Now The post Innovation Will Continue to Drive Square Stock Higher appeared first on InvestorPlace.
The U.S. stock market again has moved to an all-time high -- and more than a few investors are worried. Finding stocks to buy is exceedingly tough, with growth names in particular at valuations not seen since the heady days of the dot-com bubble. Stocks to sell, however, are a different story.Of course, valuation concerns have dogged U.S. equities for most of what is now a ten-year bull market. For the most part, stocks have simply climbed the proverbial "wall of worry". And those investors who have seen many growth stocks as "too expensive" in many cases have missed out on huge gains.Even by those standards, however, more than a few stocks have made moves in 2019 that are almost crazy. 31 stocks with a market capitalization over $2 billion already have doubled or better just this year. Many more trade at sales multiples equivalent to earnings multiples for quality companies.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThese 10 stocks, in particular, have serious valuation questions. All ten admittedly have real businesses (even if not all ten are profitable), and real reasons why investors have been so optimistic. But at these prices, it doesn't take much for these overvalued stocks to stumble. * 10 Tech Stocks That Are Still Worth Your Time (And Money) Long-time high-flyer Netflix (NASDAQ:NFLX) proved that point this week, falling 11% after losing U.S. subscribers. One - or more - of these ten stocks could be next. Beyond Meat (BYND)Source: Shutterstock The gains in Beyond Meat (NASDAQ:BYND) have been beyond incredible. The company originally priced its IPO in a range of $19 to $21. That figure was moved to $25. By the end of its first day of trading, BYND stock had gained 163% to $66.It wasn't done. Aided by a big earnings beat, BYND would triple from that first-day close before pulling back. Its upward march has resumed, however: BYND now is up nearly 600% from its IPO price in two and a half months.There is a real opportunity for the company to disrupt the meat market, as Luke Lango argued last month. But valuation is an enormous question mark. The overvalued stock trades at 25x fiscal 2020 EPS estimates. And the obvious concern is that Beyond Meat doesn't have the 'meatless meat' market to itself.Indeed, competition is intensifying. Tyson Foods (NYSE:TSN), which sold its stake in Beyond Meat before the IPO, is entering the market. Nestle (OTCMKTS:NSRGY) is on the way as well. Privately held Impossible Foods already has a solid position. So does Kellogg (NYSE:K), whose Morningstar Farms business already sells plant-based meat substitutes.The optimism toward Beyond Meat's opportunity makes some sense. The fact that it will have to share the opportunity, however, means that 580% gains and a nearly market-leading price-to-sales multiple both look like too much. Shopify (SHOP)Source: Shutterstock Anyone who has called e-commerce platform Shopify (NYSE:SHOP) overvalued has looked silly. I should know: I've done so twice this year, most recently in April with SHOP stock at $206.Of late, I've largely given up fighting the tape. The company's new plan to add fulfillment to its offering opens its addressable market -- and allows investors to model greater growth for longer, potentially keeping SHOP stock at these levels.That said, fundamentally, I'm far from convinced. SHOP stock still trades at something like 25x sales -- like that of BYND, one of the highest multiples in the market. I still believe, as I wrote last year, that the sensitivity of small businesses to a recession makes SHOP more cyclical than investors realize. * 7 Marijuana Stocks With Critical Levels to Watch The valuation here simply seems to incorporate perfection. Perhaps Shopify can deliver, particularly as it moves into fulfillment and starts serving larger clients. But even the best business can stumble and there is no room for anything close to a stumble left in Shopify stock. Zoom Video Communications (ZM)Source: Shutterstock Along with Beyond Meat, Zoom Video Communications (NASDAQ:ZM) has calmed fears about the tech IPO market that followed the weak debuts of Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT). ZM stock hasn't been quite as explosive as BYND, but it's posted big gains, nearly tripling from its $36 IPO price.The gains aren't a surprise. Indeed, I wrote not long after the IPO that Zoom stock was the perfect stock for this market. Growth was impressive, potential huge, and valuation -- even then -- stretched. As I put it at the time, "The point right now is that the numbers can work. And for now, that's all that really matters."With ZM stock nearing $100 again, however, the question is if the numbers can work. Zoom trades at nearly 50x fiscal 2020 revenue. That's 50x sales -- not earnings. The FY21 consensus earnings per estimate is a nickel per share, suggesting a forward P/E multiple nearing 2,000x.Decades -- not years -- of growth are priced into the videoconferencing software company. And maybe that growth is coming. But even in a tech space that looks overheated, ZM's valuation stands alone. And if there is any concern about valuation -- let alone a sell-off like that seen at the end of last year, when Zoom was still private -- there may not be an overvalued stock more likely to fall than ZM. Square (SQ)Source: Shutterstock It might be a bit unfair to put Square (NYSE:SQ) on this list of stocks likely to crash. It's already pulled back; even after touching an eight-month high this month, SQ stock still sits 20% below all-time highs reached back at the beginning of October.Valuation is steep, but in context not that stretched. SQ stock, backing out its cash, trades at less than 70x 2020 consensus EPS estimates. That's not cheap, to be sure, but relative to other growth stocks in this tech market it seems almost reasonable.That said, there are real concerns here. The company's potential move into banking excites some investors, but at this point in the cycle, should be seen as a risk. Competition remains intense. Like Shopify, Square has significant exposure to small businesses (even though it's been successful of late in grabbing larger customers). * 3 Stocks That Look Like Death The worry more broadly is that Square's business model works great now, in a growing economy where its technology is transformative. At some point, the environment will be very different. If investors start focusing on those out-year risks, SQ stock -- which fell 50% in a matter of months last year -- could be in for another big fall. Aphria (APHA)Source: Shutterstock Marijuana producer Aphria (NYSE:APHA), too, might seem an odd choice for this list of overvalued stocks. Most notably, APHA stock already has crashed -- twice. It fell 75% during last year's fourth quarter, and after a huge rally has dropped 40% since early February.But APHA -- and other marijuana stocks -- still could see much more in the way of downside. Even with lower valuations across the sector, the likes of APHA, Canopy Growth (NYSE:CGC), and Cronos Group (NASDAQ:CRON) still trade at nosebleed revenue valuations. Earnings are negative almost entirely across the board.And beyond Canada, it's still not clear from where the next wave of growth comes. U.S. legalization is stalled out until at least 2021 (and likely much longer). Movements toward medical marijuana worldwide are making progress, but recreational legalization is likely to take some time.Cannabis stocks, including APHA, already are drifting down, as investors lose patience. But valuations remain stretched even at these lower prices, and if growth expectations dim, there's a lot further for APHA and its peers to fall. Salesforce.com (CRM)Source: Shutterstock Salesforce.com (NYSE:CRM) could be the granddaddy of this list. Salesforce has been public for 15 years -- and it's looked like a potentially overvalued stock for that entire period. Yet over that stretch, CRM stock has returned a whopping 3,550% -- a stunning 26% average annual return. Investors who focused on valuation, and not the business, missed out on those market-leading gains.In this market, there's not a ton of reason to suggest that CRM can't keep flying. But of late, it does look like investors are starting to focus just a bit more on valuation -- and competition. Most notably, Microsoft (NASDAQ:MSFT) is trying to take share with its Dynamics 365.Meanwhile, Salesforce.com has continued pumping out 20%+ annual growth -- as it has for years -- but CRM stock has stalled somewhat. Indeed, while other software stocks have soared, CRM has traded sideways since the beginning of February.The problem is that CRM stock, even after half a year of flat returns, still isn't cheap -- or close. The stock trades at 46x next year's earnings, which isn't terrible considering its growth. But as I noted earlier this year, some two-thirds of the company's guidance for adjusted net income comes from the exclusion of stock-based compensation. That's a real cost, that dilutes CRM stockholders. Back that out, and a 20-year-old company is trading at something like 140x forward earnings. * 7 Stocks Top Investors Are Buying Now In this market, investors have been happy to ignore stock-based comp. If and when that changes, CRM stock is going to fall. Etsy (ETSY)Source: Shutterstock Etsy (NASDAQ:ETSY) has a great business. It's dominant in the crafting space, having dispatched potential competition from Amazon.com (NASDAQ:AMZN). The company was able to raise seller fees last year, which gave a big boost to revenue, margins, and the ETSY stock price.But at the end of the day, Etsy remains a mostly niche business. Growth in its industry likely is limited. Like Square and Shopify, Etsy may be benefiting from the 'newness' of the platform. Businesses will fade, whether due to a recession or simply an increasing realization that the returns don't match the investment.Even down 11% from early March highs, none of those risks are priced into ETSY stock. It still trades at well over 10x revenue, even backing out its cash, and over 50x next year's EPS on the same basis. And as I wrote in April, even the company's five-year targets suggest upside is limited.To some extent, given the soft performance of ETSY in recent months, investors may be coming to the same conclusion. But if ETSY's valuation gets reset that of a company with a relatively limited market and a potential ceiling on its growth, the soft drift of the last few months could become an accelerating downturn. Lululemon Athletica (LULU)Source: Shutterstock What Lululemon Athletica (NASDAQ:LULU) has accomplished is rather incredible. At a time when retailers -- and particularly apparel retailers -- are getting hammered, Lululemon continues to drive impressive growth. Thanks in part to a Q1 earnings beat, LULU stock has hit all-time highs and might seem to have further to go.But at 34x forward earnings, even backing out net cash, it's not hard to wonder if the rally has run its course. Lululemon isn't going to be immune from the pressures on retail forever. 'Athleisure' is a hot trend at the moment; like all trends, that won't last forever. One only need to look at Gap (NYSE:GPS), whose Athleta nameplate is a minor Lululemon competitor, to see what happens when 'cool' turns 'uncool'. * 3 Food Stocks to Buy for Fast and Big Profits To be sure, that type of shift may not happen at Lululemon to the same extent: the demand from athletes for its clothes likely will persist. But LULU remains priced for years of growth - and it's not hard to see that growth stalling out when the next hot trend comes along. Snap (SNAP)Source: Shutterstock The turnaround at Snap (NYSE:SNAP) clearly has made some progress. User growth is returning. Snap's ability to monetize those users via advertising sales -- particularly outside the U.S. -- is improving dramatically. Several Wall Street analysts have jumped on board as well.As a result, SNAP stock has been one of the year's biggest gainers, rising 171%. But SNAP also has begun pulling back, dropping 10%+ in the last few sessions - and more downside could be ahead.Most notably, SNAP stock's valuation has returned to the stratosphere. It's still burning cash and posting negative Adjusted EBITDA. SNAP trades at about 8x next year's revenue - a big multiple relative to profitable and entrenched social media plays Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR).Again, Snap Inc deserves some credit -- and SNAP stock deserved some sort of rally. But 170% looks like far too much as investors are starting to realize. Roku (ROKU)Source: Shutterstock Roku (NASDAQ:ROKU) has taken a modest hit after Netflix earnings but still sits just off all-time highs. It's outperformed even SNAP, gaining 257% so far this year -- the best performance of over 700 stocks with a current market capitalization over $10 billion.Here, too, there are some reasons for optimism. Roku obviously is a play on streaming. And with new platforms coming from Disney (NYSE:DIS), AT&T (NYSE:T), and Comcast (NASDAQ:CMCSA), it's not hard to see why investors are excited.But this isn't exactly a risk-free story. Roku gets little in the way of revenue from Netflix or Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) unit YouTube. Its player sales -- about one-third of guided 2019 revenue -- are unprofitable. The current valuation is something like 17x platform revenue at a time when most media and content companies are trading at low- to mid-single-digit multiples. Even NFLX trades at less than half that multiple. * 10 Tech Stocks That Are Still Worth Your Time (And Money) This seems like another case where investors are paying any multiple for growth -- yet perhaps aren't understanding the full story. Roku has growth ahead -- but like so many overvalued stocks on this list, potentially not nearly as much growth as investors are pricing in.As of this writing, Vince Martin is long shares of Gap Inc. He has no positions in any other securities mentioned.The post 10 High-Flying, Overvalued Stocks in Danger of Crashing appeared first on InvestorPlace.
Cash App is free to download, and its core functions free to use. So how does this app, which has been downloaded more often than Venmo, make money?
After San Francisco State University received a $25 million gift in XRP, Bay Area companies and non-profits are grappling with the risks and rewards of digital donating with cryptocurrency.
The "Mad Money" host shifted his stance Wednesday and said during his show that Facebook "has to drop" its plans. Speaking directly to Facebook execs, who Cramer said watch the show, he said the company should take "some of your money" geared toward an expansion into payments and acquire Square Inc (NYSE: SQ) for $70 billion, or a 100% premium.
Square, Inc. looks like it is poised to make an upside move, so let's check out the latest charts and indicators so we can participate. In this daily bar chart of SQ, below, we can see a sideways trading pattern for prices from late January. Prices dipped in May but if you look at the trading volume and the On-Balance-Volume (OBV) line you will not see signs of increased selling nor aggressive selling.
We highlight tech stocks that might come up with promising earnings results despite inventory glut, trade war and regulatory scrutiny.
Square (NYSE:SQ) has reached an inflection point. After losing over one-fourth of its value during the spring, Square stock has now recovered to its February highs.Source: Shutterstock This leaves traders wondering where SQ goes next. The increasing influence of Square could eventually make the company one of the biggest in tech. Consequently, this growth has taken the company to high valuations.While this portends well for the future of the company, whether to buy SQ stock at these levels remains unclear.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks Top Investors Are Buying Now Square Is the Next Tech GiantSquare is so much more than a competitor to PayPal (NASDAQ:PYPL). Long term, SQ stock will become the Apple (NASDAQ:AAPL) or the Amazon (NASDAQ:AMZN) of finance. It has begun to follow in Amazon's footsteps by becoming both a conglomerate and an ecosystem, and ultimately, a disruptor.The company started by enabling every smartphone owner to accept credit cards. It has since moved into point-of-sale systems and can now handle other business functions such as payroll, funding, and marketing. It has also enabled website creation through its purchase of Weebly. Late last year, Square even made a second attempt to become a bank. This approval would allow them to accept deposits.All this will combine into the same ecosystem, one that could do to many industries what Netflix (NASDAQ:NFLX) did to video stores and cable television. If nothing else, it makes Square's point-of-sale system a more compelling offering than the ones built by a company such as NCR (NYSE:NCR).The increasingly cashless society also plays into the firm's plans well. Square's Cash App serves the same function as banks from a consumer standpoint. This could leave investors and consumers may question the future need for a Bank of America (NYSE:BAC) or a Citigroup (NYSE:C). While I believe it is too early to predict the destruction of large banks, it could force radical changes to their business models to survive.Consequently, the question as to whether to buy SQ stock has become one of when and not if to buy. Like other disruptors, SQ trades at a high price-to-earnings (PE) ratio. Analysts forecast average annual profit growth at 46.1% for the foreseeable future. Hence, the company can attract investors even with its forward PE of around 73. The Charts on Square StockWithout fundamentals, analysts will evaluate Square based on charts and momentum. SQ happens to trade at a critical level. At around $82 per share, Square stock trades almost 20% below its all-time high of $101.15 per share. It has also reached the approximate price point from which it pulled back in February.If it sustains itself above $82 per share, I think it will run higher in the near term, perhaps even retesting levels above $100 per share. A pullback could mean that it retests support in the mid-$70s per share range.It could also portend the beginning of a trading range between the low $60s and low $80s per share level.Another critical point could come Aug.1 when the San Francisco-based financial tech firm reports earnings for the second quarter. Since SQ will likely report an earnings beat, investors should watch forward guidance. This could provide the catalyst needed to drive Square stock for the foreseeable future. The Bottom Line on Square StockInvestors need more clarity on the equity's direction before buying SQ stock. Square supports a massive growth rate and continues to make the moves that could make its ecosystem one of the most influential in all of tech.However, the price of Square stock has reached levels where it pulled back in February. At this point, investors need to know that SQ is not forming a double top in the low $80s per share range.If it closes in the mid-$80s per share range or higher, it could retest that $101.15 per share high. If it pulls back, investors should wait until the stock finds its next inflection point.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post Square Stock Is a Buy and Hold, but Not at Current Levels appeared first on InvestorPlace.
Since early June, Square (NYSE:SQ) stock has been in the bull mode. Square stock shot from $60 to $82. But hey, so has the rest of the market. Just some of the catalysts include the expectation of lower interest rates and a truce with the U.S.-China trade war.Source: Shutterstock And yes, some Wall Street analysts are warming up to Square stock. Consider Raymond James' John Davis, who raised his rating on the shares from underperform to market perform. The main reason for this is he believes that Square's debit card is likely to see increased momentum, adding as much as $100 million to the top-line next year.No doubt, this would be a big deal.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut of course, much of the focus for SQ stock will be on the near-term. In fact, we'll get the second-quarter results on Aug. 1.So what is on tap? Well, in terms of revenues, the consensus forecast is calling for $557 million, up about 45% on a year-over-year basis. As for the bottom line, the estimate is 16 cents a share, compared to 13 cents during the same period last year. All in all, there remains quite a bit of optimism on Wall Street. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip The Square Stock Price and Other NewsDuring the quarter, there has been much activity, especially with partnerships. Here's a look at some of the notable events: * Square teamed up with the Ogden Raptors - a minor league baseball team that's part of the Los Angeles Dodgers farm system - to provide payment services. The deal involves both online sources, such as with Apple (NASDAQ:AAPL) Pay and offline ones. * Called Square for Restaurants, this is a set of order management integrations for Postmates, DoorDash and Chowly. All these services are not part of the core POS system, which means eliminating the use of various other tablets and manual entry of orders. * Square has entered a deal to be the payments and POS provider for the Indianapolis 500. The event includes more than 300,000 customers and about 500 concession stands. It's actually the largest sports venue in the world. * A resident of southern California has sued Square because he alleges the company's invoice system mistakenly sent his personal medical history to a friend. His attorneys are looking to put together a class-action suit. Interestingly enough, the Wall Street Journal recently wrote a piece on how Square's system has misfired on various occasions. * Now when it comes to SQ stock, one of the most important growth drivers is its Cash App. According to Instinet analysts Dan Dolev and Conan Leon, the app has 56.1 million users, which is more than PayPal's (NASDAQ:PYPL) fast-growing Venmo. They currently have a $100 price target on SQ stock, which was recently increased from $90. Bottom Line on Square StockSquare CEO Jack Dorsey has certainly done a great job with the company. What started as a simple app has quickly transformed into a strong platform with a robust ecosystem. It's also amazing that he has been able to do this while still the CEO of Twitter (NYSE:TWTR).Yet there are definitely issues with SQ stock. Even though the company deserves a premium valuation, it is still quite steep, with the forward price-to-earnings multiple of 73X.Sell-side analysts are generally cautious as well, with three sell ratings and 17 holds. And the average price target assumes zero upside from current levels.For the most part, Square stock is pricing in much of the good news. So this could make the upcoming earnings report a bit dicey since the growth rate has already been trending down during the past few quarters.Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Even If Q2 Numbers Are Solid, Square Stock Looks Tapped Out appeared first on InvestorPlace.
(Bloomberg) -- Twitter and Square Chief Executive Officer Jack Dorsey addressed Apple Inc. employees at the iPhone maker’s headquarters Tuesday, a signal of the strong ties between the Silicon Valley giants.Dorsey, who co-founded Twitter Inc. and Square Inc., is one of several speakers talking to select Apple employees as part of an ongoing series, people familiar with the matter said. The billionaire spoke with staff from the marketing department, they said, asking not to be identified discussing internal matters.While the address itself didn’t point to a new partnership between Dorsey’s companies and Apple, it was indicative of their bond and existing collaboration. Apple promoted Twitter as an iOS app coming to the Mac this fall, and the social media service is deeply integrated into both the iPhone and iPad. Apple was also among the first retailers to sell Square’s now-common credit-card reader. Apple and Twitter representatives declined to comment.To contact the reporters on this story: Mark Gurman in San Francisco at firstname.lastname@example.org;Kurt Wagner in San Francisco at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Bulls are ready to narrow in on the winners after the S&P 500’s historic rally which culminated in the index reaching over 3,000 on July 10. But how are investors supposed to pick the stocks that are poised for success? TipRanks offers the Smart Score tool which is made up of 8 key factors proven to increase the chances of finding the stocks that are best positioned for long-term growth. These factors include financial blogger opinions, insider activity and news sentiment. All this data is combined into a single numerical score with 10 being the highest. With the help of this tool, we found three “Perfect 10” tech stocks that are ready to outperform. Salesforce.com, Inc. (CRM)Salesforce is the leading provider of cloud-based business support software. They offer data-driven solutions in a world where the amount of data being produced is only growing.On June 10, the company broke the news of its almost $16 billion deal to acquire Tableau Software Inc. (DATA). While share prices dipped after the announcement, analysts don’t appear to be concerned. The company dominates the CRM space. With 20% market share, it has more control than its next three competitors combined. It already boasts around 10 million customer support cases in its Service Cloud and over 3 million Sales Cloud leads. Not to mention its other product offerings that include Salesforce Einstein, Salesforce Customer 360 and the Salesforce Lightning platform are expected to drive even more revenue growth.Q1 2020 results were strong, with the company seeing revenue increase 24% year-over-year to $3.7 billion. Cash generated from operations reached almost $2 billion, demonstrating 34% year-over-year growth. On June 25, management updated their Q2 2020 fiscal guidance with revenue now expected to fall within the range of $3.94 to $3.95 billion, demonstrating that more growth is on the way.Just yesterday John Difucci, a five-star analyst from Jeffries, reiterated his Buy rating and $189 price target. He believes that despite a platform outage in May, current consensus estimates are conservative. “Salesforce's pipeline remains robust and it is well positioned to achieve its long-term goals,” he added. Another top analyst, Jennifer Swanson Lowe said on July 5, “Channel work shows robust demand for Salesforce's solutions, and recent merger disclosures show a thoughtful and lengthy process behind the Tableau deal.” She reiterated her Buy rating and $190 price target on the stock. With a ‘Strong Buy’ analyst consensus and $183 average price target, it’s clear why TipRanks scored this stock a “10”. View CRM Smart Score Twilio Inc. (TWLO)The cloud communications company specializes in helping businesses improve their apps and digital interactions with customers. Since Twilio’s IPO three years ago, share prices have grown 256% and analysts don’t predict a slowdown anytime soon. The company has a strong customer base with 154,797 active customer accounts (ACAs) as of March 31, up from 53,985 a year earlier. Revenue from its software-as-a-service (SaaS) platform only is rising as the demand for effective online communications is only increasing. In February, Twilio acquired SendGrid, a cloud-based email services company. The company believes this acquisition drove the revenue growth witnessed in Q1. For Q1 2019, revenue was up 81% year-over-year, reaching $233 million. Compared to Q4 2018, its top line increased by 14%. The company updated its full year guidance on April 30, with revenue expected to fall between $1.10 billion to $1.11 billion, up from $1.065 billion to $1.077 billion. On June 18, top analyst, Richard Valera, initiated coverage with a Buy rating and $165 price target. “By leveraging its early market position, a highly efficient developer-led sales model and growing array of differentiated, higher-level functions on its platform. TWLO has delivered exceptional organic growth. As well, the company's recent move up the stack into the application space with its Flex contact center adds another, meaningful growth driver to its business,” he said. Top rated financial blogger, Luke Lango, thinks that the stock’s big growth fundamentals, favorable market fundamentals and strong technical trends make it a must buy. “All three of those tailwinds should persist for the foreseeable future, meaning that TWLO stock should continue to defy valuation standards and stay in rally mode,” he added. The Street is bullish on this “Perfect 10”. The stock has a ‘Strong Buy’ analyst consensus, receiving 13 buy ratings vs 2 holds over the last three months. Its $154 average price target suggests 6% upside potential. View TWLO Smart Score Square, Inc. (SQ)With consumers paying less and less with cash, digital non-cash payments are expected to reach 726 billion transactions by 2020. Square has designed its payment processing technology so merchants of all sizes can accept non-cash payments. The company also offers a digital peer-to-peer payments app, an enterprise payroll app and lending services. Square has placed significant focus on gaining international market share. The company partnered with Sumitomo Mitsui Banking Corporation, with the bank distributing its reader in all branches located throughout the country. SQ stands out among its competitors as it offers many types of digital transactions as opposed to just e-commerce solutions.Some investors might be concerned that SQ’s valuation is too high. The stock is currently being traded at 65.6x forward earnings and 10x sales. However, its growth projections might just be enough to reassure investors.Management expects global retail sales to grow to almost $34 billion, or at a 5% compounded annual growth rate through 2025. Square GPV is also expected to increase into 2025 by a 20%-plus annualized rate while revenue is forecasted to be up 25%. The company is attributing these jumps to hardware and ancillary solution revenue.Josh Beck, an analyst from KeyBanc, reiterated his Buy rating and $100 price target. “While its Cash App monetization narrative may take time to develop, we remain constructive on growth potential,” he said today.Financial blogger, Chris Lau, believes that SQ’s outlook is more conservative than it should be. “If the company raises its 2019 guidance, then SQ stock could attract more buyers, causing the stock’s rally to accelerate,” he said. The Street is more cautiously optimistic about the last “Perfect 10” on our list. The stock has a ‘Moderate Buy’ analyst consensus and $87 average price target, suggesting 6% upside. View SQ Smart Score
Despite a valuation that would give an Internet entrepreneur a nosebleed, Visa (NYSE:V) still has analysts pounding the table for it. Marketwatch, for instance, still counts 39 analysts on the Visa stock beat. Click to Enlarge Source: Shutterstock Of that number 30 have it rated a buy, and only one has it as low as an underweight on valuation. This despite Visa being up 31% in the first half of 2019.It's extraordinary faith for a company that now has a market cap of $406 billion on $20.6 billion in 2018 revenue. Expectations are for earnings of $1.33 per share when it reports July 23, with a "whisper number" of $1.37 per share, on revenue of $5.7 billion. The price to earnings ratio for the last four quarters is over 37.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAmong transaction processors, high valuations aren't unusual, but this is extreme. MasterCard (NYSE:MA) has a market cap of $285 billion on revenue of $15 billion. Square (NASDAQ:SQ) is worth $34 billion on 2018 revenue of $3.3 billion. * 7 Dependable Dividend Stocks to Buy The Bull Case for Visa StockWhat the bulls see is the end of cash and its replacement by Visa's payment system. They also see a company with a net margin of 50%. Last year $10.3 billion of its $19.9 billion of revenue hit the net income line.Bulls say Visa continues to innovate with Visa B2B Connect, a business payment system enabling seamless payment connections between international banks.They like its purchase of privately-held Verifi, for an undisclosed price, as a way to help merchants reduce chargebacks.They love a pilot program that will let merchants offer installment payments directly from their cash registers. They're even cheering the $75 million purchase of Rambus' token and smart-ticketing business, even though that business cost Rambus itself $105 million two years ago.Quite simply, analysts believe Visa stock is unstoppable. Because its bank payment network is used by so many third-party processors, innovations that fail outside it can succeed inside it. When Visa tells other processors to jump, they still drop what they're doing to ask, "How high?" Visa Stock Has Real RisksThe risks with Visa are those of the global economy.This means the risks are rising. The global economy is now growing at just 2.6% per year, and the World Bank says risks are firmly on the downside. China's growth has slumped to an annual rate of 6.2% and the trade war continues to bite.Even if electronic payments are taking an ever-bigger piece of that pie, processors like Visa remain under threat on pricing and costs. India's Unified Payments Interface offers lower costs in order to reduce the use of cash there. Chinese systems like Alipay from Alibaba Group Holding (NASDAQ:BABA) cost less, too. Nationalism is also increasing. India won't let processors take customer data outside the country.Visa is trying to get ahead of low-cost systems by joining Facebook's (NASDAQ:FB) Libra Association, but it still has enormous technology debt. Visa runs an incredibly costly network of charge agreements among banks, merchants and customers that has developed over decades and costs money to maintain. The Bottom Line on Visa StockVisa is the premier player in the global payments space, but does that make it a great investment at its current price?Square costs just 10 times revenue, and it's growing much faster. True, Square is only marginally profitable, while Visa is a profit-making machine, still growing at 10% per year. Visa looks safer.If you got into Visa as an income investor five years ago, when it was paying a dividend of nearly $2 per share on an investment of $63, your current yield is just 1.5%. It might be time to take some profits and invest them for a higher yield. Even younger investors might start looking for a good exit point. A profit is only paper until the cash is in your hand.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear, available now at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in BABA. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dependable Dividend Stocks to Buy * 10 Stocks Driving the Market to All-Time Highs (And Why) * 7 Short Squeeze Stocks With Big Upside Potential The post At These Valuations, It's Time to Take Profits on Visa Stock appeared first on InvestorPlace.
Shopify (NYSE:SHOP) stock is on fire year-to-date. Shares in the e-commerce platform zoomed 134% from January, with the stock currently trading around $322 per share. While the company's cloud-based SaaS solution for retailers is a game-changer, it is tough to justify a buy at the current valuation levels.Source: Shutterstock But with sales up 50% year-over-year, do the bulls have a point? Read on to see if Shopify stock is worth the sticker price. SHOP Continues to GrowShopify made its bones offering "back-end as a service" for scores of small e-commerce businesses. With that market locked up, SHOP stock needs new growth avenues to move the needle. With the company's move toward large enterprise customers, Shopify has found new ways to scale up the business into a global e-commerce powerhouse.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBased on Q1 2019 results, the growth story continues to play out. Total revenues were $320.5 million, up 50% year-over-year. Subscription revenues were up 40%, as merchants continue to sign up for the platform. The biggest growth was in Merchant Solutions, up 58% YOY. This growth was driven largely by increased merchandise volume among Shopify's third-party merchants.Shopify continues to develop its infrastructure, allowing them to become a global e-commerce powerhouse. The company's payments platform now enables merchants to accept sales in multiple currencies and get paid in their local currency; 40% of eligible merchants now use Shopify's shipping platform. The company's merchant cash advance unit grew 45% YOY.Shopify is to e-commerce what Salesforce is to CRM. The rise of e-commerce continues to be SHOP's strongest catalyst. But as SHOP scales up, will the company stumble along the way?With the Q2 earnings release anticipated to occur in August, within a few weeks, investors will have a clearer picture of Shopify's future growth. But for the time being, Shopify's recent fulfillment center announcement indicates their long-term strategic plans. * 7 Dependable Dividend Stocks to Buy With Fulfillment Center Expansion, Is Shopify the Next Amazon?Shopify surprised Wall Street with their announced plans to build their own fulfillment centers. The move created speculation that SHOP will go toe-to-toe with Amazon (NASDAQ:AMZN) for a bigger piece of the e-commerce pie.But can SHOP become the next AMZN? Building out their infrastructure makes Shopify a stronger partner for third-party retailers. But with the company barely generating $1 billion in sales, how do they expect to finance this massive build-out?Based on CFO Amy Shapero's presentation at Shopify's Investor Day, the company anticipates the fulfillment investment to be spread over the next five years. Shopify expects "incremental revenue to largely offset costs". The company anticipates positive returns on this investment to occur after 2023.The fulfillment build out is a long-term investment. Investors today pay a substantial premium for the expectations of Shopify's game-changing moves. But can this anticipated growth alone justify SHOP stock's current valuation? Valuation: How SHOP Stock Stacks Up to Its PeersWith SHOP continuing to post operating losses as it invests in growth, enterprise-value-to-sales is the best tool to compare SHOP stock's valuation to peers. Shopify currently trades at a EV/Sales ratio of 28.Here are the EV/Sales ratios of Shopify's main publicly traded peers:Amazon: 4.23PayPal Holdings (NASDAQ:PYPL): 8.5Square (NYSE:SQ): 9.4Twilio (NYSE:TWLO): 24.7The Trade Desk (NASDAQ:TTD): 21But given that Shopify is purely a SaaS platform, it is tough to compare valuation against its direct competitors. Amazon, being a full-fledged retailer as well as a marketplace, obviously trades at a lower EV/Sales valuation. PayPal is a fully scaled up operation, with slower growth but high operating margins.Twilio and The Trade Desk operate in different industries, but are similar to Shopify in that both are cloud services providers (cloud communications for Twilio, digital advertising for The Trade Desk).With Shopify stock trading at a premium to fellow B2B service providers TWLO and TTD, SHOP appears richly valued. While the company is making leaps and bounds dominating e-commerce, the stock is not a buy at these valuation levels. * 10 Stocks Driving the Market to All-Time Highs (And Why) Bottom Line: SHOP Stock Not A Buy TodayTen years down the line, Shopify could be a formidable competitor to Amazon. But at the current trading price, SHOP stock is too overvalued for investors to consider.While the company has seen significant growth in revenues, the company has yet to be profitable. While the announced fulfillment expansion is a positive catalyst for future growth, investors need tangible results before putting in a buy order.Short term, SHOP stock is a sell. A massive pullback could signal a buying opportunity to place a bet on SHOP's future prospects. But until then, investors should be cautious before chasing this growth story.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dependable Dividend Stocks to Buy * 10 Stocks Driving the Market to All-Time Highs (And Why) * 7 Short Squeeze Stocks With Big Upside Potential The post Why Short-Term Investors Should Avoid Shopify Stock appeared first on InvestorPlace.
About a year ago, I coined the high-growth STARS acronym on InvestorPlace, saying that these five growth stocks -- Shopify (NYSE:SHOP), The Trade Desk (NASDAQ:TTD), Adobe (NASDAQ:ADBE), Roku (NASDAQ:ROKU), and Square (NYSE:SQ) -- are the high quality, big return potential stocks that investors want to buy now and hold for the next several years.The idea behind the STARS acronym was simple. The market's favorite high-growth acronym -- FANG, which comprises Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) -- was becoming increasingly obsolete for investors. That's not to say that FANG companies have peaked. They haven't. They are still doing very well. But, they are such large companies and long FANG is such a crowded trade, that the long-term return potential in these names isn't what it used to be. It almost certainly isn't the best return potential investors can find in the overlap of growth and technology.STARS is exactly that. Each one of the STARS stocks is supported by huge secular growth trends, is small relative to their addressable markets, is unknown relative to the FANG stocks, and has huge upside potential in a multi-year window. That's why I told investors to forget FANG and buy the STARS stocks a year ago.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe results speak for themselves. Over the past year, the S&P 500 is up about 7.5%. Had you bought one share in each of the FANG stocks, you would be up just 5% over the past year. But, had you bought one share in each of the STARS stocks, you would be up more than 70% over the past year. Click to EnlargeIn other words, STARS stocks have generated more than 60 points of alpha over both the S&P 500 and FANG stocks over the past twelve months. * 7 Dependable Dividend Stocks to Buy This out-performance from the STARS group will continue. Without further ado, let's take a deep look at why you should buy each one of these high-quality growth stocks. STARS Stocks to Buy for the Long Run: Shopify (SHOP)Source: Shutterstock Trailing 12-Month (TTM) Gain: 90%The Bull Thesis Tag Line: "The Next Big Thing in Commerce"Core Bull Thesis: The secular bull thesis on e-commerce solutions provider Shopify is simple. Thanks to the widespread proliferation of the internet, the commerce world is two doing things: One, it's pivoting into direct retail, wherein brands and merchants are selling to and communicating with customers. Two, it's also pivoting into a decentralized model, wherein anyone can sell anything to anyone else.Shopify is at the heart of both these pivots, providing the tools which allow any seller to sell any item through any direct channel, and is thus levered to benefit from the expansion of these two huge secular tailwinds.These tailwinds are still in their early innings. Shopify's gross merchandise value represents less than 1.5% of global e-retail sales, and is growing at a steady 50%-plus pace. Further, Shopify just started to jump into the physical retail world, dramatically expanding this company's addressable market.As such, SHOP has the necessary room and firepower to keep growing at a robust rate for a lot longer.Key Growth Projections: * Shopify goes from 1.5% e-retail market penetration today, to 7.5% penetration by 2030, as direct decentralized retail trends gain mainstream traction. * Shopify goes from about 0% physical retail market penetration today, to about 0.5% penetration by 2030, as Shopify finds some success in the physical retail world. * Total gross merchandise volume (GMV) and Merchant Solutions revenue grow at about 30% annualized pace into 2030. * Subscription Solutions revenue grows at a high teens annualized pace, as Shopify continues to grow its merchant base. * Total revenue grows at a 25%-plus pace over the next decade. * Operating margins scale from 1% today, to 25% by 2030, as robust revenue growth drives significant operating leverage on already huge gross margins. * 2030 EPS settles around $25, versus projected EPS in 2019 of $0.60.Long-term Price Target: About $750, based on a commerce platform average 30-forward multiple on projected fiscal 2030 EPS of $25.Present Value: About $300, based on a 10% discount rate and a 2029 price target of $750. The Trade Desk (TTD)TTM Gain: 160%The Bull Thesis Tag Line: "The Future of Advertising"Core Bull Thesis: The secular bull thesis on The Trade Desk centers around something called programmatic advertising. Programmatic advertising is essentially automation in the ad industry. Before, ad spend allocation was largely a guess-and-check effort, while ad transactions were conducted between two human parties. Programmatic advertising automates both of those processes, leveraging AI and big data to optimize ad spend allocation and dynamically transact ads based on those optimal allocations. In this sense, programmatic advertising is the future of advertising.The Trade Desk is one of the most important players in the programmatic advertising world, and one of the fastest growing, too. But, ad spend through the TTD platform measures less than 1% of the near $300 billion global digital ad market. That market is rapidly marching towards $500 billion-plus levels. Eventually, most of that $500 billion-plus worth of spend will be transacted programmatically, and the lion's share of that programmatic spend will happen through TTD.As such, The Trade Desk has huge growth potential over the next several years through automation in the ad world, and if all that growth potential materializes as expected, TTD stock will fly higher from here.Key Growth Projections: * The global advertising market measures around $1 trillion by 2025, up from $650 billion-plus this year. * The digital ad market grows to around $650 billion by 2025, representing 65% share versus 45% share in 2018, as engagement and ad dollars continue to flow into the digital channel. * TTD grows its share in the digital ad market from less than 1% in 2018, to 2-2.5% by 2025, as programmatic advertising becomes more widely used across various ad formats and channels. * Gross spend on TTD and revenues grow at a 25%-plus pace into 2025. * Profit margins gradually move higher as robust revenue growth drives positive operating leverage on healthy gross margins. * 2025 EPS comes in around $15, versus 2019 estimates of $2.90. * 10 Stocks to Sell for an Economic Slowdown Long Term Price Target: About $375, based on a digital ad average 25-forward multiple on projected 2025 EPS of $15.Present Value: About $230, based on a 10% discount rate and a 2024 price target of 375. Adobe (ADBE)TTM Gain: 20%The Bull Thesis Tag Line: "The Cloud Giant in a Visually Dominated World"Core Bull Thesis: The secular bull thesis on cloud giant Adobe is predicated on two very simple ideas: First, the world is becoming increasingly obsessed with visuals. Consumers are increasingly engaged in visual-first social media apps, like Instagram and Snapchat. They are also spending more time on visual-content-heavy streaming platforms like Netflix. At the same time, businesses are increasingly using visuals to communicate with their customers, since these forms of communication are what resonates most deeply with today's consumer. Thus, both consumers and enterprises are shifting to a more visually-focused world.Second, Adobe is the unrivaled king in delivering visual solutions. Sure, there are a ton of Adobe competitors out there, but none really rival Adobe. They are all just knock-offs. Long story short, Adobe dominates the visual-focused industry, and when it comes to creating visuals on both the consumer side (e.g. editing a photo for Instagram) and the enterprise side (e.g. creating a visually aesthetic ad campaign), everyone turns to Adobe solutions.Put those two ideas together, and it becomes increasingly obvious that Adobe has plenty of room to grow over the next several years as both consumers and enterprises increasingly adopt visual-focused cloud solutions.Key Growth Projections: * Adobe's Document Cloud, Creative Cloud, and Experience Cloud businesses continue to grow at a robust pace over the next several years given digital and visual related tailwinds, and ultimately power about 15% annualized revenue growth into 2025. * Gross margins expand gradually towards 90% as Adobe benefits from steady but small price hikes given lack of competition. * Operating margins expand towards 50% as 15% revenue growth drives healthy operating leverage on huge gross margins. * EPS settles around $23 by fiscal 2025.Long Term Price Target: About $460, based on a growth average 20 forward multiple on projected fiscal 2025 EPS of $23.Present Value: About $290, based on a 10% discount rate and a fiscal 204 price target of $460. Roku (ROKU)Source: Shutterstock TTM Gain: 111%The Bull Thesis Tag Line: "The Cable Box of the Streaming World"Core Bull Thesis: When I first created the STARS acronym, the most controversial stock on the list was Roku, given what many perceived as huge competition risks. But, ROKU stock is up 111% over the past year as the company's secular bull thesis has drowned out competition risks.The core bull thesis here is that Roku is becoming the central access point (or "cable box") of the streaming world -- a platform which consumers everywhere rely on to access their favorite streaming services like Netflix, HBO, Amazon Video, and the like.A year ago, there were concerns that Roku couldn't maintain this "cable box of the streaming world" positioning because bigger competitors would come in and gobble up its customer base. But, those concerns missed three big things: 1) Roku is content-neutral, it's competitors aren't, and this content neutrality ultimately makes for a more friction-less viewing experience; 2) Roku is already the runaway leader in this space, and consumers like the intuitive Roku UI; and 3) the streaming space will big enough to accommodate more than one service platform aggregator.As such, Roku has done nothing but rattle off big-growth quarter after big-growth quarter over the past year, and ROKU stock has more than doubled in the process. The streaming market globally is still relatively nascent, and ad dollars are just now starting to follow consumers into the streaming channel, so Roku's long-term growth narrative is in its first few innings. Over the next several years, the company will continue to rattle off big-growth quarters and ROKU stock will trend higher.Key Growth Projections: * The global streaming-video-on-demand (SVOD) market grows from roughly 300 million households today (25% TV household penetration), to around 600 million households by 2025 (35% TV household penetration, assuming mild global TV household growth). * Roku's platform goes from about 30 million accounts in 2018 (about 10% market share) to about 100 million by 2025 (about 17.5% share). * Average revenue per user rises at roughly 15% per year into 2025, as unit SVOD revenue moves higher due to higher streaming service prices and more streaming service subscriptions per account, and AVOD revenue moves higher from a higher inflow of ad dollar volume. * Total revenues rise at a 25%-plus pace into 2025. * Platform gross margins scale towards 70%, while player gross margins stay around 5%. * The opex rate drops to 40% as robust revenue growth drives significant operating leverage. * EPS settles around $5.50 by 2025. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond Long Term Price Target: About $165, based on a big growth 30-forward multiple on projected fiscal 2025 EPS of $5.50.Present Value: About $100, based on a 10% discount rate and a projected 2024 price target of $165. Square (SQ)Source: Shutterstock TTM Gain: 22%The Bull Thesis Tag Line: "The Backbone of Modern Commerce"Core Bull Thesis: The secular bull thesis on Square is based on the idea that Square is transforming into the backbone of the the modern commerce world by creating a payments ecosystem tailored to 21st century consumption and retail habits.Consumers globally are pivoting away from cash transactions towards non-cash transactions, because non-cash transactions are significantly more convenient and more levered to digital shopping. As such, global non-cash transaction volume has risen at a steady 10%-plus clip for the past several years.Over the next several years, non-cash payments volume is expected to run at a 10%-plus pace, driven by heavier card usage in developed economies and broader urbanization and digitization in developing economies.Square has built a payments platform which helps merchants of all shapes and sizes process these non-cash transactions. On top of that, the company has developed a myriad of tangential solutions - such as a digital peer-to-peer payments app, an enterprise payroll app, and lending services - all of which are tailored to the consumption and retailing habits of the 21st century.Square is developing a payments ecosystem which is built for modern commerce. Yet, the platform still only accounts for 0.35% of all global retail sales. As such, the trends and addressable market here imply that Square has a lot of room and firepower to grow over the next several years.Key Growth Projections: * Global retail sales grow at a 5% compounded annual growth rate into 2025 to nearly $34 billion, due to inflation and global urbanization trends. * Square's market share of the global retail sales pool rises from 0.35% in 2018, to 1% by 2025, as the company expands its reach in the physical retail world from micro-merchants to bigger merchants, and as the company takes a deeper dive into the e-commerce world. * Square GPV grows at a 20%-plus annualized pace into 2025, while revenues grow at at 25%-plus annualized pace, driven by incremental revenue from hardware and ancillary solutions. * Profit margins move steadily higher over the next several years as increased scale drives positive operating leverage. * EPS settles around $4.50 by fiscal 2025.Long Term Price Target: About $135, based on a payments stock average 30-forward multiple on fiscal 2025 EPS of $4.50.Present Value: About $85, based on a 10% discount rate and a fiscal 2024 price target of $135.As of this writing, Luke Lango was long FB, AMZN, NFLX, GOOG, SHOP, TTD, ADBE, ROKU, and SQ. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dependable Dividend Stocks to Buy * 10 Stocks Driving the Market to All-Time Highs (And Why) * 7 Short Squeeze Stocks With Big Upside Potential The post 5 STARS Stocks Smashing the Market (FANG Stocks, Too) appeared first on InvestorPlace.
It has been very hip to be long Square (NYSE:SQ) stock these past few weeks. Now, however, it's time to consider being less trendy and waiting for a less carefree pullback that's making increasingly good sense off and on the price chart. Let me explain.Source: Shutterstock For bullish investors it has been a wonderful few weeks since I last wrote about SQ stock. Interest rate optimism and lesser U.S. China trade war saber rattling have allowed the broad-based, large cap S&P 500 and tech-heavy Nasdaq indices to climb by 4.5% and 7%, respectively, to marginally fresh highs. But it gets even better for SQ stock investors.Over this same period, Square stock has rocketed higher by 20% while building the right side of a very constructive-looking corrective base on the price chart. It's all good, right? Longer-term, I remain optimistic. But in the short-term, the risks have also increased for bullish investors.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSQ's earnings are out in two weeks and the last time the company delivered its results, investors were far from happy. A mixed report failed to live up to expectations, which led to shares getting hammered by an immediate 8%, then continuing to outpace the broader markets on the downside during May's broad-based corrective selloff.But following Square stock's rally this past month, shares are nearly 11% above last quarter's post-earnings confessional. Furthermore, what many had viewed as a pricey growth play has become even more expensive with today's forward price-to-earnings ratio of 74 and PEG ratio of 2.24. By comparison, peer PayPal (NASDAQ:PYPL) trades at 34x forward earnings and a PEG ratio of 1.98. * 7 Dependable Dividend Stocks to Buy Today, the price of SQ stock has less margin for error to keep Wall Street happy. And on the price chart, shares are warning investors that pressing the transaction button to buy SQ is likely to come with an undesirable late penalty fee of sorts. SQ Stock Weekly Chart Click to EnlargeI'm a fan of larger constructive bases like Square's generally setting the stage for higher prices. But for timing purposes, a pattern breakout through Square's February mid-pivot high of $84.66 within this particular double-bottom pattern is at increased risk of being a difficult entry point for bullish investors.An overbought daily and weekly chart stochastics indicator and price action outside both SQ chart's Bollinger Bands stresses the heightened likelihood of a pullback or even a failed breakout. In either scenario breakout buyers will be faced with paying too much for shares in the near-term and quite possibly a loss if the pattern entry is managed with a technical exit to minimize exposure.A quick look at a lopsided crop of bullish articles penned recently at InvestorPlace, also gives me reason to think the strong price action in SQ stock won't continue without some challenges. I'm agreeable with most of the optimism, such as Luke Lango's article at InvestorPlace this past week. Still, from a trading vantage point, it's another warning sign shares of Square are more prone to downside risk than otherwise.My suggestion for SQ is to simply wait for a pullback that's strong enough to remove today's rampant bullishness in shares while keeping the integrity of the pattern intact. Technically, I'd like to see $77 hold during a pullback without questioning the durability of this particular base. As such, that's my line in the sand if an opportunity to buy Square stock on weakness unveils itself over the coming couple of weeks. Disclosure: Investment accounts under Christopher Tyler's management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. . For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dependable Dividend Stocks to Buy * 10 Stocks Driving the Market to All-Time Highs (And Why) * 7 Short Squeeze Stocks With Big Upside Potential The post Why Itas Less Hip to Be a Square Stock Investor Right Now appeared first on InvestorPlace.