Please ensure Javascript is enabled for purposes of website accessibility

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

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

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

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.