The COVID-19 pandemic led to changes in consumer behaviors that helped providers of cloud-based services, digital payment services, delivery services, e-commerce platforms, and many other businesses thrive over the past year. Consequently, the shares of major players in these areas have attracted significant investor attention.
Although high inflation raises concerns about significant market volatility in the near term, shares of companies with solid long-term growth prospects could deliver excellent returns in the long-term.
Four such popular stocks are: PayPal Holdings, Inc. (PYPL), Uber Technologies, Inc. (UBER), Marqeta, Inc. (MQ), and ContextLogic Inc. (WISH). Wall Street analysts are optimistic about the upside potential of these stocks and should be on investors’ radar.
PayPal Holdings Inc. (PYPL)
PYPL operates as a technology platform and digital payments company that enables customers and merchants to carry out digital and mobile payments worldwide. Its payments platform allows consumers to transfer and withdraw funds from their bank accounts and hold balances in their PayPal accounts in various currencies. It also offers gateway services that enable merchants to accept payments online with credit or debit cards and digital wallets.
On September 21, 2021, PYPL announced the new PayPal app, an all-in-one, intelligent, and personalized digital wallet. The new PayPal app introduces new features and services, including PayPal Savings, new high-yield savings account provided by Synchrony Bank, bill pay, in-app shopping tools, deals, and rewards, up to two-day early access Direct Deposit, buy, hold and sell crypto, and Buy Now, Pay Later services. These new features are expected to create expanding market reach in the near term.
On September 7, 2021, PYPL announced to acquire Paidy, a leading two-sided payments platform and provider of buy now, pay later solutions in Japan, for $2.7 billion in cash. The acquisition will expand PYPL’s capabilities, distribution, and relevance in the domestic payments market in Japan, improving its existing cross-border e-commerce business in the country.
For its fiscal third quarter ended September 30, 2021, PYPL’s net revenues increased 13.2% year-over-year to $6.18 billion. The company’s non-GAAP net income came in at $1.32 billion for the quarter, marking a 3.5% year-over-year improvement. Its non-GAAP EPS improved 3.7% year-over-year to $1.11. The company had cash and cash equivalents of $7.78 billion as of September 30, 2021.
Analysts expect PYPL’s EPS to improve 19.6% year-over-year to $4.64 in the current year. The consensus revenue estimate of $25.48 billion for the current year represents an 18.8% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters. The stock’s EPS is expected to grow at a 20.4% rate per annum over the next five years.
Over the past month, the stock has lost 18.6% in price and closed Friday’s trading session at $208.30. Of 27 Wall Street analysts, 22 have rated the stock Buy, and four rated it Hold. The average price target of $280.48 for the stock indicates a 34.7% upside potential.
Uber Technologies Inc. (UBER)
UBER is a technology platform that offers multi-modal people transportation, ride-sharing, restaurant food delivery, payment processing solutions, and freight carrier and shipper connections worldwide. The company operates through three segments ─ Mobility; Delivery; and Freight.
On November 8, 2021, Serve Robotics, the leading autonomous sidewalk delivery company, announced a partnership with UBER to enable on-demand robotic delivery service to UBER’s UberEats customers starting in Los Angeles early next year. This new kind of safe, reliable, and environmentally friendly delivery service is expected to reach consumers in the upcoming months.
On November 1, 2021, UBER announced it would partner with Bed Bath & Beyond (BBBY) and buybuy BABY to help launch the brand-new baby, and kids vertical in the UberEats app. Due to BBBY’s products’ high demand, UBER’s new baby and kids hub made it easier for parents to get BBBY products on-demand and delivered right to their doors. The company expects to gain good demand in the upcoming months.
UBER’s revenue for the third quarter ended September 30, 2021, increased 72.2% year-over-year to $4.85 billion. The company’s EBITDA came in at $8 million for the quarter, compared to a loss of $625 million in the prior-year period. UBER had $6.48 billion in total cash and cash equivalents as of September 30, 2021.
Analysts expect UBER’s EPS to improve 50.5% year-over-year to $16.76 billion for the current year. The stock surpassed consensus EPS estimates in three of the trailing four quarters. Analysts expect the stock’s EPS to grow at a rate of 59.3% per annum over the next five years.
Over the past month, UBER has gained 3.4% in price and ended Friday’s trading session at $45.12. 19 out of 20 Wall Street analysts rating the stock have rated it Buy, and one rated it Hold. Analysts’ average price target of $69.75 represents a 54.6% upside potential.
Marqeta Inc. (MQ)
MQ operates a cloud-based open application programming interface platform that provides modern card issuing and payment processing solutions for consumer and commercial use cases that are either the core of or in support of their core business. It offers solutions in various verticals, including commerce disruptors, insurance, retail marketplace, media and advertising agencies, digital banks, tech giants, and large financial institutions.
On October 27, 2021, MQ partnered with Bill.com (BILL), a leading provider of cloud-based software that simplifies, digitizes, and automates complex, back-office financial operations for small and midsize businesses (SMBs), to power new innovative commercial card products for BILL’s financial institution customers. MQ is looking forward to helping BILL’s customers in enterprise payments through its innovative modern card issuing platform and supporting their long-term partnership.
On October 25, 2021, MQ announced to partner with Branch, a leading workforce payments platform, and Uber Technologies’ (UBER) Uber Freight to bring fast, reliable payments and carrier-first financial services to the logistics and transportation industries. Through MQ’s modern card issuing platform and Branch’s digital wallet, Uber Freight can pay carriers significantly faster than the industry standard, enjoy greater cash flow and afford the large upfront investments and expenses.
For the fiscal third quarter ended September 30, 2021, MQ’s net revenue increased 56% year-over-year to $131.51 million. The company’s adjusted gross profit came in at $59.07 million, representing a 67.4% year-over-year improvement. MQ had $1.26 billion in cash and cash equivalents as of September 30, 2021.
MQ has gained 17.5% in price over the past month and ended Friday’s trading session at $24.29. Out of five Wall Street analysts rating the stock, two rated it Buy, and two rated it Hold. The average price target of $32.80 indicates a 35% upside potential.
ContextLogic Inc. (WISH)
WISH operates as a mobile e-commerce company internationally. The company operates a Wish platform that connects users to merchants. It also provides marketplace and logistics services to merchants.
On October 4, 2021, WISH announced a partnership with the state-owned Spanish carrier Correos to open up cross-border trading opportunities for 8,000 Spanish merchants. The deal will help Spanish merchants process their orders quickly and efficiently within a fully trackable system designed to optimize the customer experience. WISH expects to witness high demand from these merchants in the upcoming months.
The Dutch Central Bank granted a Payment Services License to WISH’s Dutch subsidiary ContextLogic B.V. (CLBV) on July 6, 2021. The license will enable WISH to process transactions and increase control over the payments value chain in a compliant manner while also reducing reliance on third parties. WISH will initially utilize the license to pay its EU merchants directly and explore other payment services in the future.
As of September 30, 2021, the company had $1.07 billion in cash and cash equivalents. Analysts expect the stock’s EPS to grow at a rate of 56% per annum over the next five years.
WISH has gained 6.5% over the past month and ended Friday’s trading session at $5.41. Analysts expect the stock to hit $9.83 in the near term, representing an upside potential of 88.7%.
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PYPL shares were trading at $212.05 per share on Monday afternoon, up $3.75 (+1.80%). Year-to-date, PYPL has declined -9.46%, versus a 26.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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