Afterpay: One of the most exciting stocks on the market

Consumer payments platform, Afterpay Touch, has received a growing chorus of support from Livewire contributors, including Geoff Wilson, Dean Fergie, and Gary Hui from Arowana. Here is what they have been saying, with some pointers on what to look for today when the company reports. 

Dean Fergie, Cyan IM

In a recent Buy Hold Sell, Dean Fergie from Cyan brought the stock as his pick: “Without a doubt, one of the most exciting stocks on the market is Afterpay Touch. It provides an interest-free payment system for consumers and merchants. In the last year, they have done almost a billion dollars in annualised sales. Strong Buy.” (VIEW LINK)

We asked Dean for an update yesterday, specifically what we should be looking for in today’s results. He told us:

"The APT result will be its first as a combined entity, post the merger of Afterpay (AFY) and Touchcorp (TCH), which was completed on 28th June 2017.  The Afterpay business will be the focus of investors’ attention being the larger entity of the two with an elevated valuation due to its incredibly high growth. 

The key result drivers will be Afterpay’s annualised underlying sales (expected to be in excess of $1bn); performance of their new in-store offering; and clearly, as with any consumer credit business, movements in bad and doubtful debts. The combined entity is expected to be profitable and the market may well have overlooked the future margin expansion from the combined businesses."

Geoff Wilson, Wilson Asset Management

A few months ago, The 2017 Future Generation Investment Forum hosted 13 of Australia’s leading fund managers, all offering at least one of their best stock ideas. Geoff Wilson from Wilson Asset Management put forward Afterpay, saying: “This is the leading provider of ‘lay-by online’. Could be the new REA, and has plenty of REA-like qualities.”: (VIEW LINK)

Gary Hui, Arowana

Gary published a full stock thesis on Afterpay for Livewire, writing that: “In general, we look for cheap, ugly, obscure and otherwise ignored companies where a mis-pricing is likely to occur. AFY – a fast growing company with a consensus FY18 P/E of ~41x – appears at first glance to be the antithesis of this, so why do we own it?”:  (VIEW LINK)