Growth stocks have made a comeback in 2024. I am seeing select stocks shoot up 100%, 200%, or more just this year. This can lead to a sense that growth is happening everywhere and to investor fears of missing out. That can lead to dangerous decision-making.
One of the worst decisions you can make as an investor is to pile into overpriced growth stocks. The recent drawdown in 2021 and 2022 is a prime example of why. Don’t make the same mistake just a few years later in this new bull market. Luckily, there are still buying opportunities out there for growth stock investors, even if they don’t have a lot of available cash to invest just now.
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A great growth stock you can buy for under $25 a share today is Remitly Global (NASDAQ: RELY). I recently purchased shares of this mid-cap fintech stock and think it has many years of growth left ahead.
Remitly was founded in 2011 with the goal of disrupting the global remittance market, which involves international money transfers for individuals. Legacy players in the industry were charging high fees on money transfers and not focusing on new technologies such as the smartphone as a way to revolutionize the payment industry. The founders saw an opportunity to compete with better technology and lower payment fees.
The company began by focusing on specific country-to-country corridors such as the United States and Mexico and the United States and India. Its strategy worked by building a trusted service for both sides of the money transfer equation. For the sender in the United States, Remitly offered an easy-to-use smartphone application and reasonable payment fees. For the receiver of the money in a place such as India, the company worked with local regulators, banks, and payment distributors to make it as easy as possible for someone to pick up money. This means through a smartphone, cash pickup, or even sometimes a cash delivery to their home when safety may be an issue.
This strategy has worked wonderfully, which is illustrated by Remitly’s consistent user growth. Active users grew 35% year over year to 7.3 million in its most recent reported quarter, driven by its smart marketing and product innovation. Revenue grew 39% year over year to $336.5 million, a much faster rate than competitor Western Union.
With hundreds of millions of remittance customers around the world and only a 3% market share today, I think there is plenty of runway for Remitly to keep growing over the next decade. It can further reinvest to improve its product, expand to more corridors, and lower its payment fees with scale. All of this will help grow its consumer value proposition versus the competition and allow it to gain even more market share.
