This Small-Cap Gem Could Be the Next 10-Bagger
Key Points
Remitly is a market-share gainer in remittances and has a long runway to keep growing.
The stock is underappreciated by Wall Street today and trades down sharply from its highs.
The company is turning the corner to profitability and trades at a cheap multiple of revenue.
- 10 stocks we like better than Remitly Global ›
The best stock performers -- the 10-baggers in your portfolio -- will typically come from small-cap picks. As market caps get larger, so does the hurdle for making your stock go up by 10x, making smaller better if you are looking for home run investments.
One small-cap gem getting no love right now is Remitly Global (NASDAQ: RELY). Here's why the stock could be the next 10-bagger in your portfolio.
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Market-share gains galore
One of the adages of legendary investor Peter Lynch is to find market-share gainers. That is, companies that are growing by taking market share steadily from existing competitors, typically legacy institutions falling behind the modern competition.
This describes Remitly. A modern remittance player with an easy-to-use mobile application and low transfer fees, the company has consistently stolen market share from the competition but still has a low market share below 10% around the globe. This gives the company the capability to keep compounding its revenue, which grew 25% year over year last quarter.
Image source: Getty Images.
Why Remitly stock is cheap right now
Despite its steady growth, Remitly has remained undervalued and underappreciated by Wall Street. Today, it has a market value of just $2.8 billion compared to over $1.5 billion in trailing revenue. Profits are slim right now, but this business has great unit economics and should begin to generate steady profits once it stops spending for growth.
Remitly stock is down 73% from all-time highs. Don't let that dissuade you from buying this fast-growing remittance disruptor, which could be a 10-bagger looking back 10 years from now.
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Brett Schafer has positions in Remitly Global. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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