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10x Stock: Should You Invest in This Three-Headed Monster?

By Eric Cuka - Jun 16, 2021 at 10:00AM

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Southeast Asia is experiencing explosive growth in categories such as esports, mobile gaming, e-commerce, and financial technology (fintech). Is there one company that you can invest in to capture gains in all of these secular growth trends? Sea Limited could be the next big winner in your portfolio.

Sea Limited (SE 1.42%) is what I like to call a three-headed monster. The holding company consists of:

  1. Garena (esports and mobile gaming)
  2. Shopee (e-commerce)
  3. SeaMoney (financial technology)

Sea is backed by Chinese technology company Tencent (TCEHY -0.33%), which owns 22.9% of Sea's outstanding shares as of March 5, 2021. Tencent has a strong balance sheet with more than $6 billion in cash, and it has mentored Garena into a global gaming powerhouse. Sea has grown impressively by leveraging its freemium game Free Fire. In Q1 2021, Free Fire was the highest-grossing mobile game in Southeast Asia, India, and Latin America. It's important to note that Sea is expanding more into Latin America, which could further boost its growth engine. 

Sea Limited combines several exciting disruptive internet and mobile growth trends into one business model. Global internet access, adoption, and digitalization are rapidly increasing, and the number of digital buyers continues to climb annually. Asia has nearly 3 billion potential internet users, and the penetration rate is only around 64%. Additionally, Latin America has nearly 500 million potential internet users with an approximate 75% penetration rate. This creates a massive total addressable market for Sea, and investors should take notice.

Today, I do a deep-dive analysis of Sea Limited. Can this three-headed monster be the next 10x stock in your long-term investing growth stock portfolio? Let's dig in and find out!

Eric Cuka owns shares of Sea Limited. The Motley Fool owns shares of and recommends Sea Limited and Tencent Holdings. The Motley Fool has a disclosure policyEric is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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Stocks Mentioned

Sea Limited Stock Quote
Sea Limited
$89.97 (1.42%) $1.26
Tencent Holdings Limited Stock Quote
Tencent Holdings Limited
$38.31 (-0.33%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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