Nuvei Stock Lost 58% in 2022: Does That Make It a Deal Today?

I am bullish on Nuvei, given its healthy growth prospects and attractive valuation.

| More on:
Credit card, online shopping, retail

Image source: Getty Images

Last year was tough for growth stocks, including Nuvei (TSX:NVEI), which lost around 58% of its stock value. Rising interest rates, an expensive valuation, and uncertain economic outlook had dragged the company’s stock price down. However, the company has made a solid start to 2023, with its stock price rising 23.4% year to date.

Last week, Nuvei announced that it has started working on acquiring Paya Holdings, an integrated payment and commerce solutions provider in the United States. The announcement appears to have increased the company’s stock price. Despite the surge, it still trades at a discount of 57% compared to its 52-week high. So, as the stock begins to recover, I believe it is an excellent time to start accumulating the stock.

Let’s look at three top reasons to buy Nuvei.

Nuvei’s Solid performance in 2022

Despite the challenging environment, Nuvei continued to post solid performance last year. Revenue and total volume grew by 22% and 36%, respectively, in the first nine months. New product launches, expansion of its products into new markets, strengthening its platform architecture and infrastructure to support higher transactions per second, and adding new alternative payment methods drove its topline.

Despite the revenue growth, the company’s net earnings declined by 44% to $52.6 million, mainly due to a surge of $83.4 million in its share-based payments. However, by removing one-time items, the company’s adjusted net income increased by 16% to $206.2 million. It also generated adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of around $266 million, representing year-over-year growth of 18%. With the company closing the quarter with a cash balance of $754 million, I believe it is well-positioned to support its upcoming growth initiatives.

Nuvei’s healthy growth prospects

The popularity of digital payments is growing amid the increasing penetration of internet services and adoption of omnichannel selling models. Meanwhile, Precedence Research expects the digital payments market to reach US$375 billion by 2030, representing an annualized growth of 17.3%. Given its wide range of product offerings and expansion across new markets, the company is well-equipped to benefit from the expanding addressable market.

Nuvei recently launched “Nuvei for Platforms,” which is a highly customizable platform that serves the payment needs of eCommerce platforms, marketplaces, banks, and large fintech companies. Also, it recently received gaming licenses in Maryland and Kansas, thus expanding its footprint in the online gaming industry across the United States.

Further, the company expects to close the acquisition of Paya Holdings by the end of this quarter. The acquisition could strengthen Nuvei’s integrated payment strategy while diversifying its business into non-cyclical verticals, with a total addressable market of $1.2 trillion. So, the company’s growth prospects look healthy.

Attractive valuation

Although Nuvei has witnessed solid buying since the beginning of this year, it still trades at a substantial discount compared to its 2021 highs. NVEI stock lost around 75% of its value compared to its all-time high of $167.5 in October 2021. The steep correction has dragged its valuation down, with the company currently trading at 16.4 times its estimated earnings for the next four quarters.

Bottom line

Amid the challenging economic outlook, with central banks expected to continue with their monetary tightening initiatives, I expect the volatility in the equity markets to continue in the near term. However, long-term investors can start accumulating Nuvei stock, given its healthy growth prospects and cheaper valuation.

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 Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nuvei. The Motley Fool has a disclosure policy.

More on Tech Stocks

Upwards momentum
Tech Stocks

The 1 Canadian Stock I Think Could Double in 3 Years

Here’s why this top Canadian stock has the potential to double in three years or sooner.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

Why Open Text Stock Rose 11% Last Month

Not all tech stocks are performing poorly. In fact, Open Text stock (TSX:OTEX) continues to rise higher, though it's still…

Read more »

Businessman holding AI cloud
Tech Stocks

2 AI Stocks to Watch in February 2023

Those looking to invest in AI stocks can consider companies such as Nvidia and CrowdStrike Holdings right now.

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

Better Buy: Shopify Stock vs. Lightspeed Stock

Shopify (TSX:SHOP) stock and Lightspeed (TSX:LSPD) stock both had their time in the sun, but which will feel the heat…

Read more »

online shopping
Tech Stocks

Why Shopify Stock Skyrocketed Nearly 40% in January 2023

Here are some key factors that make SHOP stock worth buying right now, despite its 40% rally in January 2023.

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Better Buy: Shopify Stock or Amazon?

Let's see which e-commerce stock is a better buy between Shopify and Amazon in 2023 and beyond.

Read more »

Businessman looking at a red arrow crashing through the floor
Tech Stocks

3 Growth Stocks Down Over 50% That Are Screaming Buys in January 2023

Given their healthy growth prospects and discounted stock prices, these three growth stocks could deliver superior returns over the next…

Read more »

New virtual money concept, Gold Bitcoins
Tech Stocks

These 2 Stocks Carry a Lot of Risk, But Their Upside is Huge

If you want windfall gains, you have to risk losing what you invest. These two stocks with disruptive technology could…

Read more »