Just in time for Christmas shopping, I’m back on lockdown. Here’s the upside though; It’s pointing me towards a golden moneymaking opportunity.
As you may have heard, California Governor Newsom has issued strict new limits on the state’s businesses as coronavirus cases climb here.
That’s going to pose a huge burden on retailers who often count half their sales during the holidays.
I’m one of those last-minute retail buyers. Don’t get me wrong, I mostly shop online.
But I love to go to our local village and find a unique piece of jewelry for my lovely wife Tracy.
So, this year it’s going to be an all-e-commerce Christmas. And like millions of others, I will be using mobile payments for a good portion of it all.
Indeed, data compiled by cloud leader Salesforce.com Inc. (CRM) says interest in mobile payments is at record levels as they head toward a value of more than $3.5 trillion.
Today, I want to show you a great way to play this surging sector with an investment that is beating the market by 73%…
A Digital Holiday
Now then, it’s never been easier to shop and pay from a handheld. Even before the pandemic hit with force last March, this was an unstoppable trend.
The global sector was worth roughly $1 trillion back in 2016, according to eMarketer. By the end of next year, that figure could hit a stunning $3.5 trillion.
I know that sounds pretty aggressive, but consider this: In its recent survey on the matter, Salesforce found a 37% increase in use for mobile shopping apps in the second quarter alone.
Many of those apps allow consumers to pay right then or link directly to Apple or Google Pay.
The Robinson family are big users of mobile payments. My wife uses Venmo to send money to our daughters.
I use Apple Pay whenever possible. I even have it tied to my parking app so it pops up automatically when I type in my car’s location.
I believe the pandemic has caused a permanent shift in consumer shopping and payments.
With the state now on lockdown once again, one of the world’s largest economies will shift heavily toward mobile transactions during the crucial holiday shopping period.
There’s clearly a lot more going on here than California’s COVID Christmas shopping.
And as you might imagine, there is no lack of choice in this area. We have young companies and veterans alike moving heavily into the space.
In a case like this, I believe it pays to take a broad brush where we can play the entire mobile payments ecosystem with a single investment.
The Whole Sector
Now you know why I continue to recommend the ETFMG Prime Mobile Payments ETF (IPAY) as a savvy way to invest in this growth sector.
Yes, this market-crushing ETF holds several of the more traditional big payments firms in its 38 stocks. We’re talking firms like American Express Co. (AXP), MasterCard and, Visa Inc. (V), all of which have mobile offerings.
But IPAY goes well beyond the big three credit cards companies. It owns firms at the leading edge of mobile commerce and also gives us some global exposure: Take a look:
- It’s hard to believe that just 4.5 years ago, Square Inc. (SQ) traded for just under $10, or 5% of its current value. Then again, per-share profits are growing at 50% a year. Square has become a leading ally of small and mid-sized businesses with its full-fledged mobile commerce platform that can process and track all of the sales, marketing, inventory, and accounting tasks a firm must fulfill.
- PayPal Holdings Inc. (PYPL). This payment processor is a spinoff from eBay Inc. (EBAY) and has been far more successful than its former parent. It has a market cap seven times that of eBay. Sales last year hit a record $15.5 billion as the firm added 39 million new accounts to 267 million. It also owns Venmo, a cash-sharing app very popular with young people that my family uses. PayPal also has roughly 21 million merchant accounts.
- Brazil’s PagSeguro Digital Ltd. (PAGS) is bringing the mobile payments revolution to Latin America’s largest economy. It was founded in 2006 as an online payment platform to provide digital payments infrastructure. The firm offers affordable, mobile-first solutions for merchants to accept payments and manage their cash through their digital systems without the need for a bank account. It’s a great business model – the World Bank says Brazil has one of the world’s highest concentrations of mobile phone use.
By the Numbers
I believe IPAY is a very cost-effective play on the whole sector. It trades at a fraction of the cost of many of its top holdings.
The .75% expense ratio is a tad higher than I like to pay. But I think it’s worth it for the performance.
Since the market bounced back last March 23, the S&P 500 is up 59%.
But IPAY is up 102% over the same period. Doing so, means it beat the market’s benchmark by 73%.
And I believe that trend will hold for the foreseeable future.
After all, IPAY holds stocks that will greatly benefit from the move to mobile payments turbocharged by the public’s shopping response to the pandemic.
So, the next time someone pulls out a smartphone at dinner, don’t roll your eyes.
You should smile instead, because they just may be about to put money in your pocket.
And while IPAY can offer reliable gains on the entire market-transforming sector, there are even higher profit margins to be found from getting in on the ground floor of the most innovative new products and technologies.
I’m talking about investing in companies that haven’t IPO’d but could in the future, when they have the potential to multiply your investment ten times or more.
Getting involved in these deals is easier than ever now. Just click here to see exactly how to do it.
Cheers and good investing,