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Is Square (SQ) Stock a Smart Long-term ‘Buy’ as Cash App Booms?

Touchstone Sands Capital Institutional Growth Fund recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of -9.45% for the quarter, outperforming its benchmark, the Russell 1000 Growth Index which returned -14.10% in the same quarter. You should check out Touchstone Sands Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Touchstone Sands Capital highlighted a few stocks and Square Inc. (NYSE:SQ) is one of them. Square is a payments and financial services company. Year-to-date, SQ stock gained 26% and on May 14th it had a closing price of $78.20. Its market cap is of $34.4 billion. Here is what Touchstone Sands Capital said:

“Square is a provider of innovative financial products for small-to-medium businesses (SMBs) and individual consumers. Software is replacing bank branches as the predominant distribution point for financial services, and the market segments where Square focuses— SMBs and consumers—are two groups that we view as most amenable to automation and digitization. Square’s SMB business pioneered the self-serve and software-enabled models for payment processing—enabling millions of SMBs to accept cards for the first time—and has since evolved into a suite of financial tools for SMB sellers to manage their operations. Square’s consumer-oriented Cash App grew from a project that created the U.S.’s first instant and direct bank-to-bank transfer service. Today, it has grown into a full-service, multiproduct consumer finance business. We believe its frictionless, low-cost offerings represent a strong value proposition for the 60 million U.S. adults currently unbanked or underbanked. We believe Square will sustain above-market volume growth via share gains and upmarket expansion, with margin expansion driven by sales & marketing and R&D efficiency.”

In Q4 2019, the number of bullish hedge fund positions on SQ stock increased by about 12% from the previous quarter (see the chart here), so a number of other hedge fund managers also seem to agree with SQ’s growth potential.

Disclosure: None. This article is originally published at Insider Monkey.

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