Some economists and market commentators believe we could be headed for a stock market crash in 2022. With that in mind, I am putting together a list of stocks I would consider for my holdings, just in case.
Fintech stock
Wise (LSE:WISE) is a London-based fintech firm. It offers international money transfer services. As somebody who uses such services frequently, I look for the quickest and cheapest options. Wise claims to have one of the quickest and cheapest options on the market. It has strategic agreements in place to be able process these transactions, helping it to garner over 10m users to date.
Wise shares are currently trading for 590p. The shares listed to the FTSE last summer at a starting price of 880p, which means shares are down 32%. The shares could fall further in the event of a stock market crash.
From a risk perspective, some consider the shares to be expensive at current levels. In fact, analysts at CitiGroup have rated the shares a ‘sell’ recently. They are concerned by the valuation and believe revenue would need to grow by 20% year on year for eight years to achieve the valuation. Furthermore, the strategic partnerships I mentioned earlier could cease, leaving Wise without its unique selling point of faster, quick services to its customers.
If there a market crash does occur in 2022, I believe Wise could be an excellent growth option for my holdings for a few reasons. Firstly, the global market for payment services is growing rapidly. Next, Wise has a decent track record of performance to date, although I do understand past performance is not a guarantee of the future. Third, Wise’s customer-centric business model is set up for it to grow its customer base and continue to stay quick and cheap. It is continually reducing fees for each transaction its customers complete, even as the business grows. This should inspire customer loyalty and with growing customer numbers, the signs are it will.
If there were a crash, Wise shares would drop substantially, which could affect the current high valuation concerns. In terms of progress, Wise’s business model, partnerships, and track record indicate it could grow exponentially over the long term. In turn, this could offer me a lucrative return as a potential investor.
Stock market crash 2022?
Macroeconomic factors at play right now have led many to believe a crash could occur. Soaring inflation is a concern for many in the world economy. The rise of consumer prices is affecting some of the premier economies in the world, such as the US and China. It is worth noting that soaring inflation has triggered stock market crashes in the past. Speaking of China, recent growth there has slowed and it is in the midst of a real estate crisis. When the Chinese economy struggles, many economists are worried for the rest of the world’s economy too. It is worth noting that nobody could truly predict a stock market crash. All of the above points mentioned could cause a crash but are nothing but speculation and conjecture right now.
Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
