ZIP Co and Washington H. Soul Pattinson: Exploring Two ASX Stocks with Market Potential

December 18, 2024 01:07 PM AEDT | By Team Kalkine Media

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ZIP Co and Washington H. Soul Pattinson: Exploring Two ASX Stocks with Market Potential — Image source: shutterstock

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Highlights

Zip Co (ZIP) shares have surged significantly since the start of 2024.

Washington H. Soul Pattinson (SOL) trades near its 52-week lows but offers strong diversification.

ZIP operates in fintech, while SOL maintains a robust investment portfolio across industries.

Zip Co (ASX:ZIP), a prominent fintech company, has seen a significant surge in its share price, reflecting the company's continued appeal in the financial technology space. The share price has jumped significantly since the beginning of 2024, drawing attention from market observers.

Founded in 2013, Zip Co operates a buy-now-pay-later (BNPL) platform that enables customers to purchase items upfront and repay in interest-free installments. The platform’s popularity has been fueled by the growing demand for flexible payment solutions, particularly among retail consumers. Zip generates revenue through transaction fees charged to businesses and late fees imposed on customers who miss payments.

Currently, the price-to-sales ratio for Zip stands at 4.63x, which is lower than its 5-year historical average of 5.81x. This indicates a potential gap between its revenue growth and share valuation. Over the last three years, Zip’s revenue has steadily increased, suggesting operational resilience despite fluctuations in its stock valuation.

Washington H. Soul Pattinson (ASX:SOL) is an established investment company with roots dating back to 1903. Its diversified portfolio spans multiple industries, including telecommunications, resources, and property development.

Key holdings in the SOL portfolio include stakes in TPG Telecom (ASX:TPG), New Hope Group (ASX:NHC), and Brickworks (ASX:BKW), demonstrating its broad investment strategy. The company’s diversified approach has helped it remain stable during market fluctuations, making it a noteworthy name in the Australian stock market.

One way to assess the performance of SOL shares is by analyzing its dividend yield. Currently, the trailing dividend yield is around 2.70%, slightly higher than its 5-year average of 2.44%. This reflects a steady dividend payout history and hints at the company’s ability to maintain consistent returns to its shareholders.

Both Zip Co and Washington H. Soul Pattinson showcase contrasting yet compelling business models. While Zip Co (ZIP) focuses on growth within the fintech sector, Washington H. Soul Pattinson (SOL) offers diversified exposure to various industries, presenting opportunities for market participants seeking stability.

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