Alphabet’s share price is down by 20% for the year. However, it has still performed better than its index (Nasdaq). From a valuation perspective, Alphabet has upside to $3,136 per share according to a discounted cash flow forecast, suggesting as much as 32.9% upside from current levels.
One compelling reason to buy shares is that an Alpahbet stock split of 20-to-1 will be taking place in July. Current shareholders will get an extra 19 shares for each share they own. New investors will also benefit by being able to buy Alphabet shares at a significantly lower price. With a significantly lower share price, demand for shares could well rise significantly, driving further price gains.
Another reason to buy is product innovation. Google’s new search features should benefit advertisers. They allow users to search with images and texts at the same time.
Local features are also being updated to show users certain products in their local area. These updates should enhance user experiences and merchant connections. This, in turn, should result in Alphabet generating greater advertising revenue.
Sea Limited operates in several fields. These include eCommerce, digital entertainment and digital payments/ financial services.
Businesses operating under Sea Limited include Sea Money Shopee and Garena. Garena is a games platform responsible for PC game and mobile game development globally.
Shopee is a social marketplace centering around mobile sales and Sea Money offers payment services and financial products to individual and commercial customers.
Should You Invest?
Sea Limited leads the eCommerce market in Southeast Asia. Over 50% of its revenue is generated from eCommerce.
Southeast Asia is one of the fastest-growing regions of the world. Its population is growing more than 50% faster than the US, and at a GDP growth rate of more than double.
The average income in the region is rising and more people are using mobile devices than in the past. With so many economic tailwinds, the company’s future prospects are bright.
Garena’s game Free Fire has enjoyed much success in both Southeast Asia and Latin America. Free Fire achieved status as the highest-grossing mobile game for nine quarters consecutively in both regions. This is likely due to the game being designed to operate perfectly even on entry-level mobile devices.
Shopee is in a great position for growth. Not only is it the top shopping app in Southeast Asia, but its revenue between January-September 2021 also grew by an impressive 174%.
Sea Limited’s newest venture Sea Money is showing promising signs of breaking into another highly profitable market. Sea Money recently acquired licenses to operate a digital bank in Singapore and also purchased a brick-and-mortar bank in Indonesia. This combined with the company currently developing technology to offer cheaper and simpler financial products puts Sea Limited in potentially a very profitable position.
Although the pandemic has impacted Sea Limited to some extent, it still has the makings of a great long-term investment.
Shopify is an eCommerce platform catering to businesses of all stages. With approximately 1.7 million merchants currently operating on the platform, it’s easy to see why it holds the largest eCommerce platform market share in the U.S.
With the U.S. being the second largest eCommerce market in the world, this is a huge achievement. Especially when you consider the platform was started by two friends that initially wanted to find a better way to sell snowboards online.
Should You Invest?
Shopify’s stock price fell substantially in 2021, largely due to the pandemic and remains beaten down.
The company recently announced to investors that it would be reinvesting all gross profits into growth opportunities. This announcement and a period of slower online sales have caused some investors to sell, which is why the stock price has fallen considerably.
Others have seen the growth potential in Shopify. Its business model is highly scalable and has generated high sales consistently in the past.
Examining the company’s prospects through the lens of valuation, it is clear that analysts are strongly bullish and have placed a consensus $564 price target on the company, representing over 35% upside from current levels.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.