Growth stocks are regaining momentum in 2024, with many delivering triple-digit returns. While this resurgence has ignited investor enthusiasm, it has also led to concerns about potential overvaluation. Amidst this backdrop, finding high-potential growth stocks at an affordable price can feel like a challenge. However, Remitly Global (RELY) stands out as an exceptional opportunity, offering a strong growth trajectory at a price below $25 per share.
In this article, we’ll explore why Remitly is uniquely positioned to disrupt the global remittance market, its plans for future expansion, and why it could be a smart addition to your portfolio.
Revolutionizing Global Remittances
Founded in 2011, Remitly Global aims to disrupt the international money transfer industry. Historically, legacy players like Western Union charged high fees and lagged in adopting modern technologies such as smartphone-based solutions. Remitly seized this opportunity by developing a platform focused on lower fees, streamlined processes, and user-friendly technology.
Key Features Driving Remitly’s Success:
- User-Friendly App for Senders: Remitly’s app simplifies sending money abroad, offering competitive fees and convenience.
- Efficient Options for Recipients: The company ensures recipients can easily access funds through methods like smartphones, cash pickups, or even cash delivery in regions where safety is a concern.
- Rapid Growth: In its most recent quarter, active users grew 35% year-over-year to 7.3 million, and revenue surged 39% to $336.5 million, significantly outpacing competitors.
By targeting underserved regions and enhancing accessibility, Remitly has built a trustworthy platform that’s well-suited to capture a growing share of the $1 trillion global remittance market.
Ample Room for Market Expansion
Despite its impressive growth, Remitly holds just 3% of the global remittance market. This means there’s substantial room for expansion as the company continues to scale its operations and refine its product offerings.
Growth Opportunities:
- Geographic Diversification: Revenue from regions outside the U.S. and Canada has been growing at an annual rate of 100% since 2019, reaching $272 million in the past 12 months. This highlights the potential for growth in untapped markets.
- Enhanced Services: Beyond remittances, Remitly is diversifying into personal finance, launching products like Remitly Circle, which allows users to store and earn interest on funds. These initiatives could significantly expand the company’s long-term revenue streams.
Remitly’s commitment to innovation ensures that it not only retains existing users but also attracts millions of new customers, positioning it as a global leader in financial services.
Why Remitly Is a Smart Buy Right Now
Despite strong recent performance, Remitly’s stock price remains undervalued. After a 40% surge following its latest earnings report, the stock is still trading at less than half its all-time high, achieved near its 2021 IPO.
Reasons to Consider Investing:
- Strong Revenue Growth: The company has generated over $1.1 billion in revenue and is expected to surpass $2.5 billion within five years if current trends continue.
- Expanding Margins: With a gross margin nearing 60%, Remitly is positioned to achieve 20% or higher profit margins as its business matures.
- Attractive Valuation: Remitly’s current market cap of $4 billion implies a forward price-to-earnings ratio of just 8 based on projected earnings in five years. This low valuation offers significant upside potential for long-term investors.
While the company isn’t yet profitable due to heavy investments in marketing and product development, its asset-light business model and scalable operations make it an attractive growth story.
Risks to Consider
Like any growth stock, Remitly comes with risks, including:
- High Competition: Legacy players like Western Union and emerging fintech firms may challenge its market share.
- Profitability Concerns: The company’s heavy spending on growth initiatives means short-term profitability remains uncertain.
- Global Economic Factors: Currency fluctuations and geopolitical issues could impact Remitly’s operations in key markets.
Despite these risks, the company’s market share and focus on customer-centric solutions position it well to navigate challenges and maintain its growth trajectory.
Why Remitly Is a Top Growth Stock Under $25
For investors seeking a high-growth stock at an affordable price, Remitly Global offers a compelling opportunity. Its focus on disrupting the global remittance market, combined with its plans to expand into personal finance, provides a long runway for growth. With a market cap of just $4 billion and significant untapped potential in international markets, Remitly is poised to deliver strong returns in the years ahead.
While the company faces competition and profitability hurdles, its user growth, expanding margins, and innovative product offerings make it one of the smartest investments in the fintech space today. At less than $25 per share, Remitly is a stock to buy and hold as it continues its journey to become a global leader in remittances and personal finance.