Markets

Why Should You Hold Green Dot (GDOT) in Your Portfolio?

Green Dot Corporation GDOT has performed extremely well so far this year and we believe it has the potential to sustain the momentum going forward. Shares have gained a whopping 118.5% in the said time frame compared with 0.4% growth of the industry it belongs to.

Factors That Bode Well

Both top and bottom lines are benefiting from a modern and scalable technology platform, millions of customers and more than 100,000 points of retail distribution with a strong cash-deposit network.

The company’s BaaS platform programs are contributing significantly to gross dollar volume and revenue growth. A robust BaaS platform-based partner business has helped it secure multi-year agreements with some of the world’s largest companyies such as Apple AAPL, Walmart WMT, Intuit INTU and Uber.

Some Risks

Green Dot is seeing increase in expenses as it continues to invest in sales, marketing and product development. In the first quarter of 2020, the company’s total operating expenses of $362.2 million increased 6.4% year over year. These expenses rose 5.4% in 2019.

Green Dot has never declared and currently do not have any plan to pay cash dividends on common stock. The Federal Reserve Board’s risk-based and leverage capital requirements and other federal laws restrict the company’s ability to pay cash dividends. So, investors seeking cash dividends should avoid buying Green Dot’s shares.

Green Dot currently carries a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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