If you were advised to buy ASX shares that have plunged 52% since April last year, how would you feel?
You would want to know why that advisor has so much conviction on an ASX stock that the market has clearly abandoned.
That's the situation with fintech Block Inc CDI (ASX: SQ2), which multiple experts are currently tipping as a long-term winner.
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'Mid-term growth will be structurally driven'
The team at ECP Growth Companies Fund acknowledged that the fintech plunged more than 12% last month.
"Block Inc underperformed in October as investor sentiment deteriorated ahead of the third quarter earnings reported in early November," it stated in a memo to clients.
"Investors were concerned about slowing growth in the Square segment following the retirement of Square CEO Alyssa Henry."
However, ECP analysts are sticking with Block for the long run, way past the current economic cycle.
"Our investment thesis continues to look-through shorter-term accelerations/decelerations attributable to changing US consumer spend.
"We believe Square's mid-term growth will be structurally driven by its progress penetrating upmarket US and offshore merchants, while its other key segment — Cash App — is around the corner from rolling out its integrated commerce offering which presents a new source of revenue growth for the company, pending its ability to execute."
Maybe they weren't expecting the payoff for their loyalty to start so soon, but the Block Inc stock price has gone gangbusters this month, rocketing 42.7%.
Excellent performance and outlook for the US fintech
Earlier this month, Moomoo market strategist Jessica Amir could not believe she was paying $7.60 for a cup of coffee.
After doing the sums, she realised there was only one winner.
"Coffee bean prices have fallen 18%. Average milk prices have fallen 10% to 23%. Oil prices — think transport — have fallen 1.4%.
"The real winner when you splurge on your takeaway coffee? The payment terminal, Square."
The latest business update was positive, according to Amir.
"Block had a positive third-quarter earnings report showing higher net revenue growth, higher earnings per share, earnings (EBITDA) and higher transaction-based revenue.
"Block also upgraded its guidance and expects long-term growth ahead."
That's why she would consider buying Block shares, if for nothing else than to pay for her expensive coffee.
"Now might just be the best time to buy into the dip before it skyrockets."
She and ECP are not the only ones bullish on Block Inc.
According to CMC Markets, all three analysts currently covering the fintech stock rate it as a strong buy.
