These stocks might be too cheap to ignore.
The stock market is one of the most effective options for average individuals to accumulate wealth over time. One reason is that it’s easy to get started, especially nowadays. Plenty of online platforms offer commission-free trading, and even with a modest sum of money, like $25, it’s possible to get whole shares of excellent companies. In that spirit, let’s consider two great stocks available under that price: Adyen (ADYE.Y -0.75%) and Fiverr (FVRR -2.42%).
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1. Adyen
Adyen, a leading fintech specialist from the Netherlands, is trading at just $17 per share. The company has lagged the market over the past five years due to a combination of post-COVID headwinds. Revenue growth has slowed, while Adyen chose to invest in its future, even as the economy tightened and most of its peers were cutting costs, resulting in lower operating margins for the company. However, Adyen has performed pretty well this year, and there is still ample growth potential ahead. In the first half of the year, the company’s revenue increased by a strong 20% year over year to 1.1 billion euros ($1.3 billion).
Adyen’s net income jumped 17% year over year to 481 million euros ($564.5 million). Adyen’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin was 50%, 4% higher than the year-ago period, despite the company still expanding its workforce, although with a more disciplined approach than it did a couple of years ago.
Although Adyen generates most of its revenue from its digital segment (payment processing for companies that primarily rely on online transactions), the company’s two other units, unified commerce and platforms, are growing significantly faster. In the first half of the year, unified commerce, which offers payment processing services across multiple channels, including online and in-person, saw its sales grow almost 31% year over year to 331.4 million euros.
Adyen still sees significant opportunities in this business. It is increasingly going after large-format retail enterprises, after historically focusing on medium-sized international merchants (especially in certain industries like luxury brands). Adyen is also advancing its international expansion plans, particularly in the U.S.
Furthermore, Adyen benefits from an economic moat due to the high switching costs associated with its services. Even with the challenges Adyen has encountered lately, the company’s strong position in the fintech industry and multiple growth paths make the stock attractive, especially at just $17 per share.
2. Fiverr
Fiverr’s shares are trading for approximately $24 as of this writing. The company has also faced obstacles in recent years, following a period of rapid business growth during the early stages of the pandemic. However, Fiverr has made tremendous progress. Instead of focusing on growth at all costs, the company achieved profitability by keeping costs under control, even as top-line growth declined.
In the second quarter, Fiverr’s revenue came in at $108.6 million, almost 15% higher than the year-ago period. The company’s non-GAAP (generally accepted accounting principles) earnings per share were $0.69, 19% higher than the year-ago period.
Fiverr has benefited from the growth of the gig economy. The company’s platform helps connect skilled freelancers with the individuals and businesses that seek their services. The former can market their skills at a low cost on a platform where they know people will be looking for their services, while companies benefit from being able to onboard contractors quickly for projects.
Some people thought the rise of artificial intelligence (AI) would harm Fiverr’s business as it would decrease demand for various specialties on its platform. However, demand for AI-related services on the company’s website increased and more than made up for that. Between AI and the continued growth of the gig economy, Fiverr still has plenty of potential to increase its revenue and profits. The company’s network effects ensure that it will remain a leader in this niche for some time. That’s why Fiverr’s shares are attractive today.
Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adyen and Fiverr International. The Motley Fool has a disclosure policy.
