The Ultimate Growth Stock to Buy With $1,000 Right Now

It is hard to find growth stocks to buy at a reasonable price today. Many of the hottest stocks in the market are soaring to undesirable prices that will disappoint shareholders in the next few years. Not every stock is like this, however. There are a select few growth stocks that have great long-term prospects, a good management team, and a stock that doesn't trade in the stratosphere.

Remitly Global (NASDAQ: RELY) is one of them. This undercovered financial services gem can deliver great gains for shareholders as it disrupts the remittance and international money transfer market around the globe. Here's why Remitly is the ultimate growth stock to buy with $1,000 right now.

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Send money at a much cheaper rate

Remitly is using digital disruption and smartphones to solve an everyday problem for consumers around the globe: high fees on international money transfers. Banks charge flat fees that can eat into your transfer abroad to family, friends, or workers, while Western Union charges exorbitant fees as a % of transactions. With its easy-to-use mobile application, Remitly is one of the companies disrupting the money transfer game by offering lower fees to send money back home.

By focusing on providing a comprehensive service on both ends of the transaction, Remitly has gained rapid share in people sending money back home from the United States to places like India and Mexico, which were its core starting markets. Now, it is expanding its money-transfer application around the globe. Everyone who makes international money transfers would like cheaper fees, which is why I believe Remitly can gain adoption in many more markets, helping it grow its revenue in the coming years.

Last quarter, Remitly's revenue grew 34% year over year to $362 million, driven by 41% growth in send volume compared to the prior year. The company is now profitable, generating positive net income of $11.4 million in the period. A lot of future growth will be driven by revenue in send corridors outside of North America, which has grown at close to 100% year over year and hit $322 million over the last 12 months.

Image source: Getty Images.

Are stablecoins a risk? Not yet

If Remitly is growing so quickly, investors might wonder why the stock is down 30% from a high set earlier this year. One reason is that there is a narrative around disruption from stablecoins, which are gaining popularity after the Circle Group initial public offering (IPO) and new legislation working through the United States government. While stablecoins may present a disruption to sending money with traditional fiat currencies, a person still needs a platform to send these coins abroad. They also don't come with zero fees, as some cryptocurrency bulls seem to think. Remitly can be a platform for stablecoin transfers if they start to get used for international money transfers.

Another risk weighing on the stock is a potential remittance tax working through the United States government. The One, Big, Beautiful Bill has a proposed 3.5% tax on outbound remittances, which could incentivize Remitly users to not send money abroad. While this is something to watch, I don't think it will stop people from sending money to family back home as it is such a small tax rate.

RELY Gross Profit Margin data by YCharts.

Why Remitly Global is a slam dunk buy

There is a lot of news weighing on Remitly's stock price. Some investors are using it as an excuse to exit this consumer-financial technology upstart. I believe it is the exact reason you should lean in and buy the stock today.

At a market cap of $4 billion, Remitly remains dirt cheap for investors with a long time horizon. Its trailing annual revenue of $1.36 billion can grow to $2 billion and $3 billion within the next five years as it has so much market share left to capture in remittances. It is currently one of the fastest-growing businesses in the sector, with revenue up 34% year over year last quarter.

Plus, it has fantastic unit economics with gross margins of 60%. At scale, this could translate to 20% net-income margins or higher. On $3 billion in revenue, a 20% margin is $600 million in earnings, or a forward price-to-earnings (P/E) ratio of just 5 based on the current market cap. This makes Remitly a dirt cheap growth stock that can provide fantastic returns for investors who buy today and hold on for many years.

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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.