Among leading growth stocks, our IBD 50 Stocks To Watch pick for today is Square stock. The company, famously founded by Twitter (TWTR) CEO Jack Dorsey, provides point-of-sale software and hardware solutions.
Square Stock Is One To Watch
On May 6, Square reported first-quarter results that handily beat analyst expectations. The San Francisco-based company highlighted an exceptional quarter of growth.
Since then, the growth stock has been on a tear, reclaiming both its 200-day and 50-day lines. In the meantime, the stock is clearing a cup-with-handle base. Shares broke out on Wednesday and remain in a buy zone that tops out at 267.62.
Square carries a near-perfect IBD Composite Rating of 98, alongside a decent 83 Relative Strength Rating, as well as double- and triple digit growth on both its top and bottom-lines, on a year-over-year basis.
Square Focuses On Bitcoin
The firm posted a Q1 sales increase of 266% to $5.05 billion. Meanwhile, EPS jumped from a loss of 2 cents a share to a 41-cent profit per share, according to IBD data.
Square saw a significant revenue increase from its subscription and services-based products. For this segment, revenue was $558 million in the first quarter, up 88%. The company’s popular Cash App delivered strong growth in the first quarter, generating $4.04 billion of revenue, an increase of 666%.
Square stock experienced major growth in 2020 as investors focused on the growth of its consumer Cash App. But the digital payment processor warned that the app expects slower growth as government stimulus payments to consumers wind down.
For Q1, Square disclosed a new $170 million investment in Bitcoin on top of its $50 million purchase in October. Square reports Bitcoin holdings as unrealized gains on investments, excluded from adjusted earnings.
In a tweet on July 15, Square CEO Dorsey said the company will create a new business line to help developers build financial services products focused on Bitcoin. Square is “building an open developer platform with the sole goal of making it easy to create noncustodial, permissionless, and decentralized financial services,” Dorsey tweeted.
Analysts expect the firm’s second-quarter earnings to taper off ever so slightly, but still remain on a fast pace of growth. Earnings are expected to rise 78% year over year to a profit of 32 cents a share. Wall Street projects revenue will rise 157% to $4.9 billion.
Square will release financial results for the second quarter Aug. 5 after the market close.
Follow Fox on Twitter at @foxonstocks for more analysis on Square stock other growth leaders.
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