New Trade for April 16th, 2021

Stocks were higher in early trading this morning after Morgan Stanley (MS) – the last of the six largest U.S. banks to report – topped analyst expectations for first quarter earnings.  In yesterday’s session the Dow rose 300 points, topping the 34,000 milestone amid blowout economic data.  At the time of writing this, the Dow was up 65 points in early trading, the S&P and the Nasdaq were also up.  

Our trade alert for today highlights a fintech favorite that analysts and hedge funds love right now.  

InvestorPlace & Charlie Shrem

The 4 Top Cryptos to Buy Before the “Big Upgrade” (Not Bitcoin)

Virtually every major corporation and government agency is investing billions to prepare for this event. I’m talking about Apple, Microsoft, Google, Amazon, Facebook, and the departments of Defense and Homeland Security, to name a few. We’ve located four small altcoins that we predict will be the biggest winners from this technology upgrade. [Full Story…]

Square, Inc. (SQ) is a San Francisco-based digital payments and financial services company that was founded by Jack Dorsey and Jim McKelvey in 2009.  The firm has marketed many products over the years, including the Square Reader, a device that accepted credit card payments by connecting to a smartphone through the audio jack, the Square Stand, a device that turned the Apple iPad into a point of sale system for retail transactions, and the Square Register, an actual point of sale system for small businesses that accepted card payments.

The company has a market cap of over $104 billion and reported a revenue of more than $9.5 billion in December 2020.  The shares of the financial service firm have been on the rise since Keefe, Bruyette & Woods, an investment banking firm, upgraded the stock of the company in late March to Outperform from Market Perform.  Sanjay Sakhrani, a KBW analyst, said that the company “offered a huge opportunity to drive incremental growth and increase engagement.” The investment firm set a price target of $250 for Square.

At the end of the fourth quarter of 2020, 89 hedge funds out of 887 in the Insider Monkey database held stakes in Square, up from 73 out of 817 in Q3 2020.  The total value of the shares held by these hedge funds in Q4 2020 was over $8.8 billion, up from $6.5 billion in the preceding quarter.

Investors will be hoping for strength from SQ as it approaches its next earnings release, which is expected to be May 6, 2021. In that report, analysts expect SQ to post earnings of $0.15 per share.  This would mark year-over-year growth of 850%.

In terms of valuation, SQ is currently trading at a Forward P/E ratio of 234.2. For comparison, its industry has an average Forward P/E of 76.31, which means SQ is trading at a premium to the group.  But what’s incredible about the company today is that it’s just scratching the surface of its potential, which is why the current consensus among 47 polled investment analysts is to Buy stock in Square Inc., with 26 Buy ratings, 17 Hold ratings and four Sell ratings.  SQ stock seems like an excellent choice for long term investors.