Millionaire Maker: Buy and Hold Nuvei (TSX:NVEI) Stock

Are you looking for high-growth stocks that can help you outperform the market? Nuvei (TSX:NVEI) could be a millionaire maker. 

| More on:
investment research

Image source: Getty Images

The payment-processing industry is booming thanks to exploding e-commerce. It is attracting fintech players across the globe. One such Canadian company that launched its initial public offering (IPO) last year is Nuvei (TSX:NVEI). In just nine months, the stock surged 110% and entered the S&P/TSX Composite Index. Could this new entrant be your companion in your journey to be a millionaire? Read ahead to know the investing case of Nuvei. 

Nuvei’s business case 

Nuvei is based on a native commerce platform. It helps merchants make pay-in and pay-out transactions across 200 markets in about 150 currencies and 40 cryptocurrencies. It has over 470 local and alternative payment methods (APMs), like plastic cards and payment apps. Merchants can use Nuvei’s services in various payment nodes like mobile/in-app, e-commerce platforms, unattended vending machines, and in-store point of sales (POS).

Nuvei earns revenue by charging a fixed fee for the gateway and a transaction processing fee. The company’s revenue will grow if the transaction volume and the number of merchants using the platform increase. It has adopted a three-pronged approach to grow its revenue:

  • Tap merchants in transaction-heavy verticals like online retail and e-commerce, online gaming, digital goods, travel, and regulated financial services.
  • Expand its payment services in new geographies. 
  • Add more APMs to its platforms. 

Nuvei is expanding on all three aspects organically and through acquisitions. For instance, 

  • Mazooma’s acquisition gave Nuvei access to 11,000 U.S financial institutions. 
  • SimplexCC added +50 cryptocurrencies to Nuvei platform. 

Nuvei’s growth drivers 

Last year, Nuvei had to its disposal the growing e-commerce market. The contribution of e-commerce to its total transaction volume increase to about 87% in the first quarter compared to about 72% last year. This drove its total volume up 132% and revenue up 80% in the first quarter. The company expects its volume to double and revenue to surge 66.5% in fiscal 2021. 

I believe Nuvei’s exposure to high-growth industries like e-commerce and eSports presents a growth opportunity for the foreseeable future. It will also benefit if the cryptocurrency boom finally picks up. 

MarketsandMarkets expects the global payment processing solutions market to grow at a compounded annual rate of 10.2% between 2020 and 2025. This growth will be driven by increasing internet penetration, e-commerce sales, and growing acceptance of contactless payments globally.

Should Nuvei stock be a part of your portfolio?

However, you cannot look at a company in isolation. There are bigger players like Fiserv and Square operating in larger markets. Then e-commerce players like Lightspeed POS and Shopify are coming up with their own payments platform. They are encouraging merchants on their platform to use their payment services. 

One concern I have for Nuvei is its not-so-favourable customer review. Its high early termination fee, independent sales agents that cut off direct contact between merchants and the company, an expensive processing equipment lease, and a fee to access advance reporting that doesn’t go well with customers. 

Bottom line

You can’t deny the fact Nuvei is on the path of high growth. It is in the right business at the right time. Yes, there are competitive risks, but the stock rewards you with higher returns. If Nuvei succeeds to gain market share and make its product sticky, the stock can double or even triple your money in the next three to five years. And if it fails to maintain growth, it could become a potential acquisition target. 

Its rewards outweigh its risks. Hence, it deserves a spot in your portfolio that’s targeted at wealth creation. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Lightspeed POS Inc, Shopify, and Square. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.

More on Investing

top TSX stocks to buy
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

This dividend stock has been absolutely crushing the TSX 60 and looks like it will continue to do so while…

Read more »

money cash dividends
Stocks for Beginners

Where to Invest $10,000 in April 2024

If you've already created a diversified portfolio and are looking for more options from a windfall, here is where I…

Read more »

data analyze research
Investing

The Ultimate TSX Stock to Buy With $1,000 Right Now

Brookfield Asset Management (TSX:BAM) is one of the best Canadian stocks to buy for those looking to put capital to…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »