Our Stock of the Week is Square (SQ). Square provides point-of-sale credit card processing that allows management of receipts, inventory and sales with analytics and feedback.
Square reported earnings on August 1 and, although its eps guidance was tepid, its revenue growth is stellar. It has seen revenues increase 33%, 36%, 45% and 48% over the last four quarter. That acceleration in revenues on a bigger and bigger base of sales is what momentum investors love.
EPS is anticipated to increase 67% this year and another 73% in 2019 but with a trailing PE of 204 this is no value play. SQ is like an Amazon or Netflix that is building revenue first and then will worry about margins down the road.
Technically the stock has been flirting with an attempt at new highs over about $72.50. There was a nice volume surge on Friday but a weak close and the stock is indicated higher this morning on a positive Barrons article about the CEO, Jack Dorsey.
As always we would not chase a gap up open but will look for a strong close and test of those highs. This may be a safe haven stock away from technology, consumer goods and commodities. The recent relative strength is promising and we will look for additional entries.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength, and will buy or sell at any time for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees and affiliates of Shark Investing, Inc. and/or principals, employees and affiliates of Shark Asset Management, Inc. (“SAMI”), directly or indirectly, controlled investment and/or trading accounts containing positions in SQ. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.