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Bull of the Day: MoneyLion (ML)

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MoneyLion (ML - Free Report) , a Zacks Rank #1 (Strong Buy), provides personalized products and financial content for American consumers. The company’s platform offers access to banking, borrowing, and investing solutions, enabling customers to take control of their finances.

The company is benefitting from underlying momentum in both the technology and financial sectors. The stock hit a 52-week high ahead of the Memorial Day weekend, breaking out on above-average volume. Shares are displaying relative strength as buying pressure accumulates in this market leader.

MoneyLion is part of the Zacks Financial Transaction Services industry group, which currently ranks in the top 23% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.

Note the favorable characteristics for this industry below:

Zacks Investment Research
Image Source: Zacks Investment Research

Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.

It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.

Company Description

New York-based MoneyLion is a data-driven, digital financial platform. Its principal products include RoarMoney, an insured digital demand deposit account; Instacash, a cash advance product that gives customers early access to their recurring income deposits; MoneyLion Investing, an online investment account that offers access to separately managed accounts; and Roundups, which provides features designed to encourage good saving and investing habits.

In addition, the company offers MoneyLion Crypto, an online cryptocurrency account that allows customers to buy, sell, and hold cryptocurrency through the MoneyLion application. The fintech giant also provides marketplace solutions including distribution, acquisition, and monetization channels, as well as creative media and brand content services.

Earnings Trends and Future Estimates

MoneyLion has established an impressive earnings history since its IPO in 2020. The company has exceeded earnings estimates in each of the last four quarters, delivering a trailing four-quarter average earnings surprise of 116.4%. Consistently beating earnings estimates is a recipe for success.

Analysts covering ML are in agreement and have been raising their earnings estimates lately. For the current fiscal year, analysts have increased earnings estimates by an astounding 2,516.67% in the past 60 days. The Zacks Consensus Estimate now stands at $1.45/share, reflecting potential growth of 131.3% relative to the prior year. Revenues are projected to rise 24% to $524.8 million.  

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s Get Technical

ML shares have surged nearly 50% already this year. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.

Image Source: StockCharts

Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of 52-week highs. With both strong fundamental and technical indicators, MoneyLion is poised to continue its outperformance.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, MoneyLion has recently witnessed positive revisions. As long as this trend remains intact (and ML continues to deliver earnings beats), the stock will likely continue its bullish run this year.

Bottom Line

MoneyLion is ranked favorably by our Zacks Style Scores, with a best-in-class ‘A’ rating in our Growth category and a ‘B’ rating in our Value category. This indicates that ML stock is likely to continue to move higher based on a favorable combination of earnings and sales growth.

Backed by a leading industry group and impressive history of earnings beats, it’s not difficult to see why MoneyLion stock is a compelling investment. An appealing technical trend along with robust fundamentals paint a bullish picture moving forward.

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