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of Nasdaq Composite index The fire is on. As of this writing, it’s up 57% since the start of 2023, and about 9% this year alone. Investors are optimistic about the state of the economy and are exhibiting bullish sentiment.
Therefore, you might think there are no attractive buying opportunities. But that’s not true. You are sure to find a business that is attractive to investors.
There’s one simple thing here. growth stocks Buy now for $100 and hold until 2024 and beyond.
Disruption of the financial services industry
Any time a company attempts to innovate in an outdated and consumer-unfriendly industry, overlaying technology and digital tools in the process, there is a chance for something positive to happen.That’s exactly right SoFi technology (Sophie -1.88%) I’ve been doing it. This online-only banking provider currently has more than 7.5 million customers. This is a 44% increase year-over-year and four times as many as just three years ago.
In the competitive financial services industry, SoFi has carved out a successful niche by providing a superior user experience. It also helps that the business targets a younger, more digitally savvy, and more affluent customer base.
The last point is important. According to management, the average income and FICO score for student loan borrowers are $154,000 and $781, respectively.Experience with all banking service providers circularityBut SoFi should theoretically be able to weather an economic downturn by allowing customers to continue making payments on time.
There are clear indicators of how well SoFi is performing. As of Dec. 31, the business had $18.6 billion in deposits. This number has increased by more than 150% compared to 12 months ago. During the period including local bank crisis, SoFi appears to be gaining the trust of customers looking for a safe place to store their savings. This provides low-cost funding to fuel loan growth.
Evolution to a sustainable business
Like most companies focused on growth, SoFi has not historically prioritized profitability. Introducing new features and attracting new customers was a key focus of investing aggressively in technology and product development, as well as sales and marketing. The strategy clearly worked.
To be clear, SoFi is not done growing. Management expects revenue to grow 20% to 25% annually over the next three years. In other words, if past trends continue in the near future, this will be a larger company with more customers.
But investors can also expect profits to soar in the coming years. After posting positive first-quarter net income in the fourth quarter, management believes SoFi will report earnings per share in the range of $0.55 to $0.80 in 2026 (up from last year’s (Loss per share was $0.36). Investors will need to pay close attention to the latest earnings report to ensure this is the case.
buy dip
Investors with $100 ready to go can definitely put their portfolio on the right track. Buying on the dip in SoFi, which is 72% below the all-time high set in February 2021, is a smart move. Stocks benefited greatly from the pandemic-related bull market. But now investors’ excitement has waned a bit.
Recently, there has been increasing attention to fundamentals. This isn’t a bad thing, since SoFi’s underlying business seems to be getting stronger from quarter to quarter and year to year. That’s why the current price-to-sales multiple of 3.3x looks very attractive, given the company’s growth potential and expected earnings surge.
SoFi stock could be a big winner over the next five to 10 years.
Neil Patel and his clients have no positions in any stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has a disclosure policy.
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