US real estate

2 beaten growth stocks should shine in 2022


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Although the stock market was volatile in September and October, the S&P 500 index remains within a few percentage points of its all-time high. For the most part, 2021 has been another good year for investors.

However, some companies have had difficult times, with languid stock prices sharply underperforming the overall market. But stock prices aren’t everything, and in the case of Paysafe (NYSE: PSFE) and Offer solutions (NYSE: OPAD), they are committed to high quality companies, which means that strong growth could be imminent.

Here’s why these stocks are expected to make a comeback in 2022.

Image source: Getty Images.

The case of Paysafe

Online gambling is a growing industry in the United States as more and more states continue to legalize the practice. Paysafe is a key enabler for online casinos and bookmakers, providing secure payment processing services and digital wallets.

The company’s flagship brands, Skrill and Neteller, are in high demand with some of the world’s largest online game providers. Paysafe has a ten-year relationship with the European giant Flutter Entertainment, which owns the popular Pokerstars platform, and the two companies now work together in the United States through Flutter’s Fox Bet sports betting subsidiary.

Paysafe is active in 15 of the 17 US states where online gambling is legal, and with seven more states slated to open in late 2021 and 2022, the company’s market opportunities continue to expand. In Canada, it is number 1 in the online gaming industry, processing almost 100% of payments across the country. It’s only a $ 2.5 billion market right now, so there is a big plus as the laws are slowly loosening there too.

The company’s North American iGaming (online gaming) segment grew payment volumes 72% in the most recent second quarter, far outpacing the rest of its business at 41%. But that doesn’t mean the rest of the business isn’t worth talking about.

In addition to gambling, Paysafe has a growing presence in the online gaming industry. Its partnership with Microsoft now covers 22 countries where it processes payments for in-game purchases made through the Xbox platform. And of course, no central payment office is complete without a cryptocurrency segment – Paysafe’s Skrill digital wallet is used with 30 cryptocurrency exchanges and offers 37 different tokens for trading.

The result is estimated revenue of $ 1.54 billion for fiscal 2021, and with a recent market cap of $ 5.7 billion, the Paysafe stock is trading at a price-sell multiple of 3. ,7 times.

Paysafe’s public listing was greeted with enthusiasm as it was caught in the special purpose acquisition craze of early 2021. Its recent share price around $ 8 is a significant discount from at its all-time high of $ 19.20, and with the company operating in all the right areas of growth, this could be a great long-term opportunity.

A smiling couple sitting on the floor of their new home, surrounded by cardboard boxes.

Image source: Getty Images.

The case for Offerpad

Real estate hasn’t changed much over the past few decades. Even the advent of the internet has not disrupted the entrenched brokerage business – on the contrary, it has made it even stronger. Consumers are used to paying a 2.5% listing fee because buying or selling a home themselves is far too complex.

But a new practice called iBuying is shaking things up. This involves high growth tech companies buying thousands of homes from willing sellers every year and selling them at a profit. It’s basically the business model – flipping house on a gigantic scale.

Founded in 2015, Offerpad is one of the newest entrants to this new industry. Since the US real estate market is worth over $ 36 trillion, there’s plenty of room for new players – it’s just too big for one or two companies. As iBuying matures, competition is likely to occur based on the prices paid for homes and the geographies in which businesses choose to operate.

Offerpad asks sellers to provide some details about their home on the company’s website, including an introductory video, and within 24 hours it will make a cash offer to purchase it.

The company sold 4,281 homes in 2020 and generated over $ 1 billion in revenue, but it is expected to crush that in 2021.

Metric

2020

2021 (Estimate)

Switch

Houses sold

4 281

5,806

35%

Returned

$ 1.06 billion

$ 1.78 billion

67%

Data source: Offerpad. Mid of 2021 Offerpad estimates used.

While this leap in financial performance is impressive, the case for Offerpad is improving. The amount of gross margin it earns from each home sold reached $ 31,500 in the second quarter, down from just $ 1,400 in the same period last year. The 2150% improvement is partly attributable to rising house prices and a vibrant real estate market, but also to the growth of Offerpad as it begins to gain momentum.

But that could get even better, as Offerpad purchased a record 2,025 homes in the recent second quarter. They will have to be sold, which means record revenues could be right around the corner.

After falling victim to the memes craze last month, Offerpad stock is down 59% from its recent price highs. This could be an opportunity for investors looking for a high growth company that will experience huge business momentum until 2022.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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