In this segment of Motley Fool Money, host Chris Hill asks analysts David Kretzmann, Jason Moser, and Aaron Bush to tell us about the companies they have their eyes on, and why. This time around, they've picked online apparel seller Stitch Fix (NASDAQ:SFIX), digital payments giant PayPal (NASDAQ:PYPL), and cloud-based email platform operator SendGrid (NYSE:SEND).
A full transcript follows the video.
This video was recorded on May 25, 2018.
Chris Hill: Let's get to the stocks on our radar. Our man behind the glass, Steve Broido, will hit you with a question. David Kretzmann, what are you looking at?
David Kretzmann: I'm going with Stitch Fix, ticker SFIX. This is a recent IPO. It went public in November. This is really a data-driven online apparel retailer. You sign up, you enter your preferences when it comes to clothing styles and brands. One of their 3,500 stylists will work on it and really personalize an experience for you and send you a box with five different items. You pick what you want, you keep what you want, and then you send back everything else. You only get charged for the stuff you keep. I think this is a really interesting look at, potentially, the future of retail. They have so much data compared to your brick and mortar retailers when it comes to consumer preferences. So, one that I'm keeping an eye on.
Hill: Steve, question about Stitch Fix?
Steve Broido: In five years, are more men or more women using Stitch Fix?
Kretzmann: Probably women. They started with women, and I bet they'll be their dominant category for a while.
Hill: Jason Moser, what are you looking at this week?
Jason Moser: Sure. Taking a look at PayPal, ticker PYPL. I was thinking about this earlier today, I think that PayPal's acquisition of Braintree back in 2013, I don't think it's hyperbole to say that that is on par with Facebook's acquisition of Instagram. I think it's that important to the business. And I think we're starting to really see the results play out here. If you look at the most recent quarter, PayPal's total payments volume was $132 billion, up 27%. Venmo, now, which is part of PayPal, is on a run rate to generate over $50 billion in total payments volume in 2018. So, it's becoming a very important part of the business. I do think that over the next ten years, PayPal and Square are going to be the two companies that really help define this payments space.
Hill: Steve, question about PayPal?
Broido: I still struggle on how to use PayPal to get money from point A to point B. Is that just me?
Moser: I do think that's just you, Steve. I mean, I figured it out, and if I can do it, then I think anybody can do it. We'll talk after the show.
Hill: Aaron Bush, what are you looking at this week?
Aaron Bush: The company I'm looking at is SendGrid, ticker SEND. This is also another recent IPO, it IPO-ed about six months ago. They are a cloud-based email services platform. As we all know, email is still a super relevant platform for advertising and reaching consumers, getting conversions, that type of thing. And their expertise as a platform is using algorithms to help target ads, get people to take action, and to work through spam filters. They sell an API to companies that they can work with in whatever development framework that they use, and they can help run marketing campaigns, that type of thing. This is still a pretty small company, about a billion dollars, but they're growing super fast, they have a really strong culture, strong leadership team. I think it's pretty interesting.
Hill: Steve, question about SendGrid?
Broido: Do I have a SendGrid email address? Is that how this works? Or, are they behind the scenes, hosting other people's email addresses?
Bush: They work with companies to help them use algorithms to better get through spam filters, and to ensure that when they send us an email, it's going to be more relevant to us, so that we open it and take action.
Hill: Do you have one you want to add to your watchlist, Steve?
Broido: I'm looking at Stitch Fix.
Kretzmann: Alright! Thank you, Steve!
Aaron Bush owns shares of FB, PayPal Holdings, and SQ. Chris Hill owns shares of PayPal Holdings. David Kretzmann owns shares of FB and SQ. Jason Moser owns shares of PayPal Holdings and SQ. Steve Broido owns shares of FB. The Motley Fool owns shares of and recommends FB, PayPal Holdings, and SQ. The Motley Fool owns shares of Stitch Fix. The Motley Fool has a disclosure policy.