Sea Limited Hits Triple Digit Growth Rates Despite Inflation

In this clip from “The 5” on Motley Fool Live, recorded on Jan. 18, Motley Fool contributors Jamie Louko, Trevor Jennewine, and Taylor Carmichael discuss how Sea Limited (NYSE: SE) is a great and relatively safe international stock pick amid the inflationary environment in the U.S. economy.

{% sfr %}

Jamie Louko: Sea Limited, it is based in Singapore, but it really operates across Southeast Asia, across Latin America, and it’s even expanding into Europe a little bit. It really dominates the e-commerce and gaming industries across Southeast Asia and Latin America, specifically Brazil. But it also has a small little fintech arm in Southeast Asia that I really, really like and it’s growing, growing rapidly. Like I said, Sea Limited started in Singapore, but it’s since expanded and it’s now in 15 countries across the world. Why I like it for an inflationary environment is it’s globally distributed. We’re seeing a lot of inflation in the U.S., but not necessarily every single country in the world is experiencing the inflation that we’re seeing. So they have that geographical or geographic diversity that a completely domestic company wouldn’t necessarily have. Somebody could definitely argue me on this, but I think that gaming and fintech are relatively inflation-resistant or at least inflation-durable industries. Gaming, their most popular game Free Fire is a free mobile app. That’s a Battle Royale game. It’s free-to-play. It’s on a mobile app. Nobody’s going to stop playing it or play it less because inflation is running rampant. They make a lot of their money and a lot of their net income or their profits on their gaming industry. The fact that one of their biggest revenue sources and their profit sources isn’t really going to be infected by inflation, that’s something that I like a lot. But moving to third-quarter financials, I just want to point out that this company is a $100 billion company and it’s putting up triple-digit growth rates, which is pretty great, and it’s across most of their business segments. Overall, revenue for the most recent quarter grew 122%. Orders on Shopee, which is their e-commerce platform, grew 123%. Like I was saying, their fintech, it’s called Sea Money. It’s a mobile wallet. They are expanding in to buy now pay later services and they are really trying to do everything for a person’s financial life in Southeast Asia. But total payment volume on their mobile wallet grew 111% year-over-year. Just the fact that this company is so spread out across the world not only in Southeast Asia, not only in Brazil, but now in Europe, it’s really exciting for not only their growth prospects, but their ability to survive and even thrive in a rough period that we’re seeing.

Trevor Jennewine: I like that pick. Taylor, go ahead.

Taylor Carmichael: I was just going to say I love that pick. We own Sea and I actually looked up the inflation rate in Singapore right now, it’s 1%. That’s a perfect way to diversify and protect yourself from crazy things in the American economy, is to own something in the world economy. That’s a particularly safe foreign pick, in my opinion, I just love Sea. It’s a wonderful pick.

Louko: Whenever I see domestic problems, I’m always looking international. I’m looking at Atlassian (NASDAQ: TEAM). I’m looking at Sea Limited. I’m looking anywhere outside of the U.S. and I really think that Sea is such a strong international stock for those who want to diversify out of the U.S.

Carmichael: Shopee, I would have to think in a lot of cases, is going to be the low-cost provider of things that you are buying. You think of Walmart (NYSE: WMT) doing so well in the 1970s, which is a horrible environment. So I think Amazon (NASDAQ: AMZN), MercadoLibre (NASDAQ: MELI), and Shopee are going to have pretty good numbers because people, when there are bad economic times, go for the cheapest providers. Internet makes things cheaper.

10 stocks we like better than Sea Limited
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now… and Sea Limited wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of January 10, 2022

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jamie Louko owns Amazon, Atlassian, MercadoLibre, and Sea Limited. Taylor Carmichael owns Amazon and Sea Limited. Trevor Jennewine owns Amazon, MercadoLibre, and Sea Limited. The Motley Fool owns and recommends Amazon, Atlassian, MercadoLibre, and Sea Limited. The Motley Fool has a disclosure policy.

Leave a Reply

Your email address will not be published.