The Afterpay Ltd (ASX: APT) share price has rocketed 94.67% since the start of the year to become a leader amongst ASX 200 shares.
This is despite falling to a 52-week low of $8.01 in the March bear market. Amazingly, the Afterpay share price closed the week at $57.00 which means the buy now, pay later company is worth a whopping $15.2 billion.
Why the Afterpay share price is rocketing higher?
I think there are a few factors behind Afterpay’s recent share price moves.
For one, the company has continued on its strong growth trajectory despite coronavirus disruptions. Many people turned to online shopping as bricks and mortar retailers were forced to closed during lockdowns.
This meant that, while some sales channels were softer for Afterpay, its online turnover was booming.
Another big factor I believe has been pivotal to the phenomenal growth in the Afterpay share price is the fact the company has minimal debt on its balance sheet. This means it can operate freely without having to worrying about creditors. In short, no one can really force Afterpay’s hand on key issues given its low leverage.
But despite Afterpay shares hitting record high after record high, are they really a good buy in 2020?
Is Afterpay a good value buy?
One thing I would say about the buy now, pay later space is that it looks a little overcrowded right now.
While Afterpay seems to be an industry leader, it does have the likes of Openpay Group Ltd (ASX: OPY) and Zip Co Ltd (ASX: Z1P) snapping at its heels.
I suspect we may see more industry consolidation throughout 2020 and 2021. With so many high growth companies operating in the space, as well as international competitors like Klarna, I’m not sure there’s room for all of them.
The Openpay share price has rocketed more than 370% higher since mid-March while Zip Co also continues to post strong monthly trading updates.
I’m not backing one particular horse in this buy now, pay later industry race. However, if Afterpay can post another bumper result in August, then I think it’s very possible we could see its share price hit $100 by the end of the year.
We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
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- Purchasing Openpay shares in March in would have pocketed you this return
- Could one of these ASX shares be ‘the next Afterpay’?
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Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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