The stock market always has a few surprises in store, as any investor would attest. However, the biggest factor experts are considering as they identify the best stocks to buy for 2021 is the same factor that dominated 2020: A few of these stocks have been overbearing for a long time and simply look primed to continue their success for yet another year. Many more of these stocks are clear “recovery” plays that took it on the downside for much of 2020, but are largely expected to turn things around in 2021. There are different growth metrics, but one of the most widely used is growth in profits, as measured by earnings per share (EPS). Investors believe that if a company consistently grows profits faster than the market as a whole, its stock price will rise as investors seek to get a share of future profits.
IOUpay Limited (ASX:IOU) provides financial technology and digital commerce software solutions and services that enable its institutional customers to securely authenticate end-user customers and process banking, purchase and payment transactions.
IOUpay Limited is a subsidiary of iSentric Limited. iSentric Limited is a company incorporated and based in Australia and is a listed public company whose shares are publicly traded on the Australian Securities Exchange (“ASX”). The principal operations and activities of the consolidated entity were the provision of software-based mobile telecommunications and technology business in the Asia-Pacific market.
One of the strongest stock classes going into 2021 is small-cap stocks like IOUpay Limited which tends to outperform in cyclical recoveries for economic expansion. “We see further upside in cyclical stocks such as global small caps, which tend to lead in recoveries and expansions, but which have lagged the recovery in leading economic indicators and remain attractively valued,” UBS advised investors on Dec. 18. Global small-cap stocks trade at a 35% price-to-book-value discount relative to large caps compared with a historical average of 18%.
Why Invest in IOUpay Limited’s Stocks?
If stocks follow earnings, 2021 should be a good year for equity investors. IOUpay Limited excelled at managing the pandemic economy, resulting in low operating costs. As part of its social gaming expansion strategy, the company is constantly looking into introducing new digital media services in South East Asia. The Company also plans to explore collaborations that will help its expansion objectives as well as provide new sources of revenue by leveraging on Isentric’s existing telecommunication and banking customers.
The global economic growth was significantly affected due to the outbreak of COVID-19 and its rapid spread across the globe. Inevitably, social and economic conditions in Malaysia, Indonesia and Myanmar have been affected by the COVID-19, particularly, as Governments have implemented lockdowns, which has restricted business activities which gave IOUpay Limited competitive during this outbreak period amidst market uncertainty. As at 30 June 2020, the consolidated group has a working capital surplus, being current assets less current liabilities, of $191,195 (2019: $907,883).
IOUpay Limited foresee some moderation in growth rates but earnings should rise by double digits, and the price is right. Based on IOUpay Limited’s earnings forecast for the year ahead, shares trade at a price-to-earnings ratio of 10, and profits “could surprise to the upside.”
IOUpay Limited benefits from the accelerated digitization of business brought on by the pandemic, and it is diversifying its customer base. Though profits are still scarce as IOUpay Limited invests in growth, it is “well positioned” to meet sales-growth targets of 30%-plus for the next 5 years.
IOUpay Limited also belongs among the best stocks to buy for 2021 because of its potential as a takeover target. IOUpay Limited is booming: Revenues have more than doubled in three years and the stock is booming, too, but it’s continued upside potential makes it one of the best stocks to buy for 2021.
Disclosure: We don’t hold shares. We were not paid to distribute the content.