Digital payments are making cash obsolete … the tiny company that looks like a “mini-Square” according to Luke Lango … how the pandemic has this stock appearing stronger than ever
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On to today’s Digest …
***In late 2015, a little-known payments processor company named Square (SQ) went public
Wall Street was not impressed.
Whereas today, a hot IPO might see a stock skyrocket 100%+ on the opening day, Square debuted to little fanfare.
In fact, just a few months after the IPO, priced at $9, the stock had fallen to $8.06.
Oh, to have a time machine …
Below, we look at what Square’s stock has done since January 1, 2016. While the S&P has nearly doubled, Square has soared more than 1,600% (at one point, climbing higher than 2,000%).
What’s been behind this growth?
For that, let’s turn to our hypergrowth expert, Luke Lango:
Digital wallets are taking over the payments world.
There’s no other way to say it. Cash is dead. Digital wallets are the future.
In Luke’s recent issue of The Daily 10X Stock Report, he highlights the huge gains from Square and another payments-processing giant, PayPal. But he notes that the big runs in these stocks have already happened.
PayPal is now a $300 billion company. Square is worth more than $100 billion. You don’t look to a $300 billion company if you want to find a 16X-gainer. The mathematics just aren’t on your side.
Back to Luke:
If only there were a hypergrowth, undiscovered small-cap company that offered a much more explosive play on the digital wallet megatrend than Square or PayPal …
Fortunately, you’re about to find out its identity.
In today’s Digest, we’re going to pull back the curtain on Luke’s “mini-Square” by sneaking a peek into The Daily 10X Stock Report.
For newer Digest readers, the “Daily 10X,” as we often call it, was created last spring for one purpose:
Deliver to your inbox — every day the market is open — a top-notch small-cap stock pick that could rise by 1,000% or more in the long run.
Since then, Luke has dug up four different 1,000%+ returning stocks … as well as plenty of winners in the range of 500%, 600%, and 700%.
Given this success record, if Luke is excited about the prospects of a small technology disruptor, it’s to our benefit to pay attention.
So, let’s find out which company Luke describes as “a largely off-the-radar digital money company that is growing very quickly and which looks like a mini-PayPal or mini-Square.”
***The evolving landscape of cash and digital wallets
Before we get into Luke’s pick, let’s look big-picture at what’s happening in the payments sector.
The transition from physical to digital payments has been going on for some time. Cash usage has been declining for decades. But the transition really accelerated in 2020 when — amid the Covid-19 pandemic — physical payment methods became taboo and contactless e-payments became the norm.
For the first time ever, digital wallet payments overtook cash payments for in-store purchases globally in 2020.
This isn’t an anomaly produced by a global pandemic. It’s a shift to a new norm.
The reality is cash sucks. It’s tough to store. It can be ripped. It can be lost. It can be stolen (and once stolen, is irreplaceable). The process of paying with cash can take a while.
Digital wallets are superior in every way.
They’re securely stored on your phone or smartwatch. They can’t be ripped, or lost, or stolen. They offer a tap-and-go, 5-second payment process.
Digital wallets provide consumers a wholistically superior to way to pay for things than cash.
This superiority is why digital wallets are taking over.
Luke notes how estimates suggest that, by 2024, digital wallets will account for more than 33% of all in-store payments worldwide. Meanwhile, cash will account for just 13% of in-store payments.
So, we have our trend established. What’s one of the most explosive ways to play it?
***A Covid-inspired pivot puts this small company in position for huge growth
Here’s Luke to introduce his pick:
Most of us have probably heard the name MoneyGram (MGI) before — and many of us have likely even seen or been in a MoneyGram retail location before, too.
Traditionally, MoneyGram has been a cross-border money transfer company. The business model was simple. You want to transfer money to your uncle in Germany, so you go down to the local MoneyGram store, execute a money transfer, and your uncle goes to his local MoneyGram store in Germany and picks up that money.
In essence, MoneyGram offered folks a low-friction, low-hassle, low-fee way to transfer money internationally.
That business got slammed during the Covid-19 pandemic.
As the world ground to a halt during the height of the pandemic, people stopped going to MoneyGram locations. So, the company adapted.
Luke explains that they built a consumer-facing mobile app… They re-did their website … They enabled digital money transfers through that app and website… They built-out functionality for sending money directly to digital wallets or bank accounts, and also incorporated e-bill paying through MoneyGram with select retail partners.
And the results?
The company has rattled over 14 consecutive months of triple-digit year-over-year cross-border transaction growth in its MoneyGram Online (MGO) business.
MGO now accounts for 30% of all transactions. MGO customers are much stickier than legacy customers, with an 80%-plus retention rate. And the app is loved by users, with a 4.8-star rating on the App Store on over 160,000 reviews.
Those are great numbers.
And they underscore that the future is bright for MoneyGram.
The reality is that through its global network of 410,000 retail stores, dozens of international partnerships, and existing money transfer operations in over 90 countries, MoneyGram has constructed a durable competitive moat for itself as an omni-channel, fully integrated, and fully compatible cross-border digital money transfer platform.
***The opportunity in MoneyGram by the numbers
One thing to note …
MoneyGram is not going to replace Venmo or PayPal.
But Luke believes such a replacement isn’t necessary for huge returns. Instead, MoneyGram will serve as a necessary complement to those solutions. It will be the go-to-choice for international money transfers, and digital-to-physical or physical-to-digital money transfers.
And that means one thing …
… MoneyGram has staying power in the digital wallet megatrend.
It also means MoneyGram stock has enormous upside potential.
So, let’s get to the good stuff. Exactly how much upside?
Back to Luke:
PayPal stock is trading at 11X 2021 sales estimates. Square stock is trading at 8X 2021 sales estimates. Those are big multiples.
But MoneyGram stock … well, it’s trading at just 0.4X 2021 sales estimates.
This gap is your opportunity.
It will close over the next few years, as MoneyGram’s digital transformation gains momentum. And — as that happens — MoneyGram stock has the potential to truly soar …
If you missed the explosive returns with Square or PayPal, here’s your opportunity.
Before we wrap up, if you like Luke’s analysis, check out his Daily 10X newsletter. As noted earlier, his track record since launching last spring speaks for itself.
I’ll add that over the past five years, Luke has picked 17 different 10X-winners. He also happens to be ranked #1 out of more than 15,000 investment experts according to the website, TipRanks.
You can learn more about the Daily 10X by clicking here. In any case, give MoneyGram a good look. This small payments-processor appears to have a huge future.
Have a good evening,