While there are quite a few payment processors on the stock market worth considering, Square (NYSE:SQ) is one of the best plays out there right now. SQ stock is already up 60% so far this year, but the firm has plenty of growth left in the tank whether the pandemic continues or not.
There’s no question that the future of payments is cashless, the novel coronavirus pandemic has only accelerated that trend. The beauty of SQ stock is that it’s neither a pandemic play nor a return to normalcy play— in either outcome, Square comes out on top.
Of course, the firm’s many small business customers need consumers to get back out there spending, and a big part of that will be the pandemic coming under control. But on the flip side, if things continue to worsen, Square’s cashless payment platform and website management tool will be an invaluable tool that businesses need to survive the Covid-19 era.
A Closer Look at SQ Stock
There are a lot of reasons to like SQ stock, but one reason the firm stands out is its all-encompassing ecosystem. The firm has expanded its service offerings to include everything from running a website to payroll management.
Square is even setting itself up as a small business lender. It’s the kind of tool that businesses get stuck into and that’s a good thing for Square’s future growth. Not only does it mean customers are likely to continue using Square, but it gives the firm a pool of eager customers to sell to as new products become available.
The Square ecosystem also gives the firm an edge of offering small business loans because the firm has access to much more reliable data than a traditional lender.
Square has access to real-time sales data that will give the company an accurate picture of its lending risks. Not only is that helpful for businesses that might otherwise have struggled to qualify for a loan, but it also helps square cut down on the number of risky loans it makes.
Catalysts for Square
It’s impossible to talk about Square’s future success without mentioning Cash App, its new peer-to-peer payment and investing tool that has taken off in recent months. Notably, nearly half of Square’s quarterly profits came from Cash app, which has taken off in popularity due to the pandemic.
The sudden spike in day trading due to the pandemic has been a boon for Cash App. Since it began offering the service for users, the firm says investing tools have been the fastest growing service within Cash app.
Cash app also allows users to buy and sell Bitcoin, another service that has seen a ton of growth in recent months. For now, Cash app users are simply buying and selling the cryptocurrency as an investment much like gold and SQ takes a commission. But if bitcoins do make a resurgence as a payment method as many are expecting, Square will be primed and ready to jump on that trend.
For now, Bitcoins aren’t used as a payment option through Square, but that could easily be changed in the future.
The Bottom Line on Square
Square is a game-changer for small businesses and its Cash app has significantly expanded the firm’s growth opportunities. The company’s well-rounded business and position within several high-growth segments makes it a worthwhile buy for long-term investors.
Square’s position in segments that stand to benefit with or without the pandemic make it a unique defensive play in a time of extreme uncertainty.
While the stock has already had a massive run-up so far this year, there’s no harm in starting to build a position and adding to it during pullbacks.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.