Sea Ltd. is the IBD Stock of the Day for Wednesday. Shares of the Southeast Asia-focused internet services firm are bouncing up from their 50-day line and forming a flat-base pattern.
Sea is looking to build off a big 2024. The stock rocketed 162% last year and is up 6% so far in January. As highlighted in a recent New America profile, Sea's gains have been powered by accelerating growth and a return to core profitability for its e-commerce operations. Its Shopee offering is the largest e-commerce platform in Southeast Asia and has also expanded to parts of Latin America.
On the stock market today, Sea stock rose a fraction to close at 110.82. With its gains, Sea stock is bouncing back from a test of its 50-day moving average support level. Shares are also hovering above the stock's shorter term 21-day moving average.
Sea stock hit a more than two-year high in December at 119.47 before a slight pullback to close the year.
Q4 Expectations For Sea
Along with Shopee, Sea also operates digital-payments provider SeaMoney and Garena, a global online games developer. Sea's gains last year followed a slump to close out 2023.
The stock sold off in August 2023 after the company said it would ramp up investments into its e-commerce business. Analysts saw the move as a response to growing competition from TikTok, PDD Holdings' Temu, the Alibaba (BABA)-backed Lazada and others.
But Sea's results have helped lure investors back. In its most recent Q3 results published in November, Sea swung to a profit of 24 cents per share vs. a loss 26 cents per share for the same period a year earlier. Sales jumped 31% to $4.3 billion, according to the Nov. 12 earnings release. That marked Sea's fastest growth since the first quarter of 2022.
E-commerce-related revenue grew 41% to $3.2 billion. Shopee, meanwhile, turned a profit, on an adjusted basis, in both Asia and Brazil.
Sea stock gained 10.5% on the day of the report, kicking off another rally for the stock late in the year.
The firm's fourth-quarter earnings will offer the next big test. Analysts project, on average, that Sea will post earnings of 37 cents per share for the December quarter. That compares with a loss of 19 cents in the year-earlier period. Sales are projected to increase 28% to $4.6 billion. The results are due in early March.
Sea Stock Chasing Covid-Era Highs
Meanwhile, Sea stock surged during the pandemic and is still chasing the highs from that era. Despite closing last year at its highest levels since early 2022, Sea stock is still well off the high near 372 it reached in 2021.
But analysts are bullish that Sea can continue building on its 2024 gains. Of the 33 analysts following the stock, 29 rate Sea a buy, according to FactSet. Three analysts are neutral and one holds a sell call.
Sea's Relative Strength Rating, meanwhile, remains a strong 97 out of a best-possible 99.
Further, Sea stock holds a strong IBD Composite Rating of 95 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one. The best growth stocks typically have a Composite Rating of 90 or better.
