How would you like to find a stock you could make 20 winning trades in a row?
And, more importantly, a stock that I believe will continue to be one of the greatest trading successes of the year ahead?
The Biggest Trend for Investors Right Now — and for Years to Come
I have been saying for some time now that the digital-payments trend is growing in intensity and will be one of the biggest waves for investors to ride over the next few years.
It’s impossible to ignore the shift toward cashless transactions, and this trend shows no signs of slowing. According to the World Payments Report 2018 from Capgemini and BNP Paribas, global non-cash transactions are expected to increase 46% between 2018 and 2021.
The easiest way for investors to take advantage of this trend is by looking for players in the payment-processing space.
I’m far from alone in noticing this trend.
Warren Buffett’s potential successor Todd Combs is keen on the payment-processing space as well. In 2018, Berkshire Hathaway invested around $300 million in Brazilian payment processor StoneCo’s (STNE) initial public offering and another $300 million or so in One97, the parent company of Paytm, India’s biggest mobile-payments startup.
While those names are a bit speculative for my taste, my hands-down favorite company and stock in this space is one of the fastest-growing digital-payments processers in the United States.
The Company Behind My 20 Win Streak
Its debut product was a small, white square that can be attached to devices such as smartphones and tablets to process credit and debit card payments.
Launched in 2009 by Twitter (NYSE: TWTR) co-founder and CEO Jack Dorsey, I’d known of the company for some time. But what really piqued my interest last year was seeing one of its little devices in the middle of nowhere — and I mean nowhere — on an archaeological dig in the Orkney Islands, north of Scotland.
I went to purchase some souvenirs at the little trailer that served as a store, and there was Square’s (NYSE: SQ) little white square attached to a tablet so the merchant could run my card. This experience gave me a first-hand look at the outsized growth potential facing the company. You attach their little square to a smartphone or tablet, connect to the internet and you’re in business.
Applications for Everyone
But the ability to process credit and debit card payments from some of the remotest parts of the world is just the tip of the iceberg for Square.
The burgeoning company has a robust and growing suite of applications aimed at entrepreneurs, small businesses and consumers. These include Square Payroll, Square Capital and Square for Restaurants. And don’t forget about Square’s Cash App, downloads of which have been surpassing PayPal’s (NASDAQ: PYPL) Venmo, the perceived leader in the peer-to-peer payment space. While both companies are seeing explosive growth in their payment apps, a number of techies laud Square for having the superior app.
The combination of Square’s easy-to-use front-end devices and powerful point-of-sale software is translating into rapidly growing market share.
Revenue Growth is There
The company is expected to report revenue growth of 42% this year and 35% next year. SQ earnings are estimated to grow close to 50% a year over the next five years. But its impressive growth estimates are not all Square has going for it.
Volatility in Square is Great for Trading
The stock is also extremely volatile, which is a big part of its appeal for me. This above-average volatility presents plenty of opportunities to generate cash by selling options.
That’s why my Options Income Blueprint members ended up with 20 winning trades a row between April 2018 and April 2019.
The average cash return per trade was 1.2%, which may not sound all that exciting. But when you factor in that those trades were open for an average of 9.5 days, that puts the average annualized return at 56.7%.
And I don’t expect this win streak to end anytime soon. While the stock appears to have plateaued over the past few months, that doesn’t concern me at all. As an option seller, I don’t need shares to move higher to keep raking in the cash.
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About The Author
Michael Shulman is a 30 Year Veteran of the financial markets – as a trader, a financial analyst, a financial writer and most recently as an educator.
Most importantly, since 2010, he has dedicated himself to teaching income investors how to get more income from their portfolios using simple yet safe options selling strategies which produce income every week. This approach was developed from the ground up in Mr. Shulman’s own accounts, his goal to develop a strategy that cannot be replicated by institutional investors of any size and therefore independent of fads and trends that change too often to provide a consistent approach for individual traders.