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Should you buy Afterpay Touch Group Ltd shares?

The Afterpay Touch Group Ltd (ASX: APT) share price continued its sensational run on Friday, reaching a record high of $6.79 and giving the company a market capitalisation of over $1 billion.

This latest gain means the payment technology company’s shares have now more than doubled in value in the last six months.

Should you buy Afterpay Touch shares?

I think Afterpay Touch is still a great long-term investment option despite its rapid rise over the last six months.

Due to the growing popularity of its service with both retailers and consumers, I expect to see more and more retail sales go through its Afterpay platform this year.

In its last update Afterpay was generating underlying annualised sales of $1.5 billion, but I can see this growing significantly in the future due to its ongoing market penetration.

Furthermore, I don’t believe for a second that the Afterpay platform will be restricted to just Australia. It may take some time, but I imagine the service would be equally as popular in lucrative markets such as the United Kingdom and United States.

If the company can gain a foothold in these markets then the sky is the limit for the company and its shares.

As I mentioned previously, I’m not the only one bullish on its shares. Goldman Sachs recently slapped a conviction buy rating on its shares and gave it a price target of $7.30.

As well as its core business, Goldman sees a lot of value in the data that the Afterpay business is collecting.

Its analysts stated: “The retailer and shopper data it collects offers insight into consumer purchasing decisions, laying the foundation for numerous value-added services to come that should entrench APT’s position in Australia’s retail ecosystem.”

In light of this, Goldman expects Afterpay Touch to generate EBITDA of $110.3 million by FY 2020. This compares to the $5.4 million it achieved in FY 2017.

Looking at these numbers it seems apparent to me that Afterpay Touch has the potential to be a future blue-chip share. If it can avoid been taken over by a global giant, that is.

As well as Afterpay Touch, I think these exciting companies have bright futures ahead of them.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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