1. Square, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 92
Total Value of Hedge Fund Holdings: $9.20 Billion
Topping the list of 10 best young stocks to buy and hold for 20 years is Square, Inc. (NYSE:SQ). Square, Inc. operates as one of the biggest financial services and digital paying companies in the United States with over 30 million active users. The company continues to grow with increasing demand in the digital world. Earlier this year, the company announced plans of purchasing the entertainment platform TIDAL. The acquisition allows the Square platform to tap musicians and artists that desire to make a career.
Square, Inc. (NYSE:SQ) posted its revenue of $5.06 billion in the first quarter of 2021, up 266% year-over-year. The 52-week price range of Square, Inc. (NYSE:SQ) is $97.92-283.19. Shares of SQ jumped 141% over the last twelve months. On May 10, BMO Capital maintained a Market Perform rating on Square, Inc. and raised a price target to $269.
There were 92 hedge funds that reported owning stakes in Square, Inc. (NYSE:SQ) at the end of the first quarter, up from 89 funds a quarter earlier. The total value of these stakes at the end of Q1 is $9.20 billion
RiverPark Funds mentioned Square, Inc. (NYSE:SQ) in its Q1 2021 investor letter. Here is what the fund said:
“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).
The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to pass through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown
from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.
We estimate that the company can grow its gross profit more than 30% and EBITDA more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”
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