MENU

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.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We're living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That's why at The Motley Fool we've been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We've found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.