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Reasons to Hold Green Dot (GDOT) Stock in Your Portfolio

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Green Dot Corporation’s (GDOT - Free Report) shares are up 4.4% in the past month against 6.3% decline of the industry it belongs to.

The company’s revenues for 2021 and 2022 are expected to grow at a rate of 6.9% and 8.2%, respectively, on a year-over-year basis.

Factors That Bode Well

Green Dot remains focused on ensuring long-term growth of its businesses. The company’s efforts are toward acquisition of long-term users of its products, improving brands and image, building market adoption and awareness of products, increasing card usage, and customer retention. Its sales and marketing efforts remain focused on a broad group, ranging from never-banked to fully-banked consumers.

Green Dot is expanding its addressable market with the help of its banking-as-a-service (BaaS) account programs. It partners with some top consumer and technology companies, including Amazon, Apple, Intuit and Uber, to design and develop their fintech banking solutions through its BaaS platform. These solutions are then made available by these companies to their consumers and partners again through integration with the BaaS program, eventually expanding Green Dot’s spectrum of consumers.

Green Dot’s cash, cash equivalents and restricted cash balance at the end of first-quarter 2021 was $2.7 billion with no debt to clear off. This strong cash position allows the company to invest in opportunities that show true potential.

Risks Associated

Green Dot is seeing increase in expenses as it continues to invest in sales, marketing and product development. For the first quarter, total operating expenses rose 18.5% year over year to $359.5 million.

Green Dot faces tough competition from companies across financial services, financial technology services, retail banking, transaction processing and consumer technology industries.

Zacks Rank and Stocks to Consider

Green Dotcurrently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector include The Interpublic Group (IPG - Free Report) , Cross Country Healthcare (CCRN - Free Report) and Paychex (PAYX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Interpublic, Cross Country Healthcare and Paychex is pegged at 10.2%, 10.5% and 8%, respectively.

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Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

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