1 Magnificent Stock I Plan to Buy on the Dip if the Stock Market Crashes

Singapore-based Sea Limited (NYSE: SE) operates the largest e-commerce platform in Southeast Asia in addition to a booming digital financial services business and a game development studio that owns some of the world's most successful mobile titles. In other words, this company is a triple threat in the digital economy.

Sea Limited stock is down 25% this year and is trading at what appears to be a bargain valuation, particularly in light of the company's accelerating revenue growth and improving bottom line. Its decline could worsen in the short term amid the volatility in the broader market, which is being fueled by elevated inflation, rising interest rates, and turbulence in the artificial intelligence (AI) industry.

But Sea Limited stock is currently at the top of my watchlist, and here's why I plan to pounce if it does get even cheaper in the near term.

Image source: Getty Images.

Three unique growth stories

Shopee is Sea Limited's hybrid business-to-consumer and consumer-to-consumer e-commerce platform, with a dominant presence in Southeast Asian countries such as Singapore, Indonesia, and Malaysia. Shopee processed 4.2 billion orders worth $38.3 billion during the second quarter of 2026 (ended June 30) alone, with both figures growing by around 28% year over year.

Monee is Sea's digital financial services platform. It lends money to Shopee merchants to help them grow their businesses, and it also offers buy now, pay later loans to consumers to increase their purchasing power. It had over 40 million active borrowers at the end of Q2, up 34%, while the dollar value of its outstanding loans soared by 62.5% to $11.1 billion.

Sea's third business is digital entertainment, which includes the Garena game development studio. Garena is responsible for global smash-hit mobile games like Free Fire and Call of Duty: Mobile, and the studio boasted 666.3 million active users across all titles during Q2. That was a modest increase of less than 1% from the year-ago period, but the number of paying users grew by 10.5% while bookings jumped 15%, so games were monetizing at a much better rate.

Accelerating revenue growth

Sea Limited generated $7.8 billion in total revenue during Q2, a whopping 48.1% increase from the year-ago period. It was an acceleration from the company's Q1 growth of 46.6%, and all three businesses contributed to the strong result.

Data source: Sea Limited.

Sea's bottom line is also improving, so its rapid revenue growth isn't a product of burning through tons of cash. It delivered $917.2 million in adjusted (non-GAAP) earnings before interest, taxes, depreciation, and amortization (EBITDA) in Q2, up 10.6% from the year-ago period.

Although Shopee accounted for most of Sea's revenue, it accounted for just $255.4 million of its adjusted EBITDA. The e-commerce business is focused on providing customers with the lowest possible prices, so profit margins tend to be thin. Digital entertainment was actually Sea's most profitable segment, bringing in $429.8 million in adjusted EBITDA. This is the benefit of having such a diverse portfolio of businesses.

Sea Limited stock looks cheap

Sea Limited stock is trading at a price-to-sales (P/S) ratio of just 2.1, which is a steep discount to its three-year average of 3.3. Plus, it means Sea is substantially cheaper than the technology-heavy Nasdaq-100 index, which has a P/S ratio of 6.4. Simply put, the stock is attractively valued right now.

SE PS Ratio data by YCharts.

Sea's balance sheet is one of my favorite things about the company. It features $10.3 billion in cash and cash equivalents with just $1.2 billion in debt, so management has a mountain of dry powder at its disposal that can be used to invest in growth and expansion. Plus, it means Sea is well equipped to handle any future headwinds, whether they come in the form of an economic slowdown or a disruption to its various businesses.

Although Sea is already attractively valued, I think rising interest rates and the recent jitters in the AI industry could trigger a sharp correction in the broader market, so investors might get an even better buying opportunity in the near future.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sea Limited. The Motley Fool has a disclosure policy.