In the past half-decade, the Alpha Group International (LSE:ALPH) share price has jumped by 229%. The 14% rally of the past year is impressive too. Last month, the growth stock joined the FTSE 250 due to the scale of the company and therefore the market cap increase. Here’s why I’m thinking about adding it to my portfolio.
Growing fast
Having just entered the FTSE 250, there will likely be a lot more scrutiny of the business. This comes as it will be added to FTSE 250 tracker funds, as well as becoming an available option for fund managers that are only allowed to buy stocks in this index or above.
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Yet it’s important to note that Alpha isn’t a newly listed company. In fact, it went public back in 2017, but was a very small public company back then. The growth from a team of 40 in one London office to a team of over 480 across 10 global offices in seven years shows that there’s something special going on.
The business is a foreign exchange and payments company. So if I’m buying a property in France and need to buy euros, I can give it a call. Or if I run a business that manufactures clothes in China, I can call on it to buy US dollars and pay my supplier. It makes money by charging a commission on the exchange rate. So the more clients it has and the more it trades, the more revenue is generated.
Why I like it
Looking forward, Alpha is well positioned to keep up the pace of growth. By recently opening and expanding new offices abroad, it opens up these markets. After all, there are only so many UK businesses that trade internationally. Yet the office in Australia can service a completely new market of companies there. The same principle goes for the other offices around the world.
Another reason I like the stock is that it should do well based on a UK economic recovery. I believe that sentiment in the UK is getting better. With inflation back at 2% and interest rates likely to fall, I think the next year could be one of progress. As a result, I’m looking to add UK stocks that should outperform on this basis.
Alpha ticks this box based on the UK client base. If businesses and individuals feel more confident and things go well, they should trade more and make more payments via Alpha. In turn, this should boost revenue for the firm.
Plenty in the same game
But as with any business, there’s risk. Alpha operate in a very competitive industry. Plenty of others are chasing the same clients. This ranges from banks like HSBC, right through to FinTechs like Wise. Therefore, Alpha needs to be really careful not to lose customers, or to slash profit margins in order to keep them.
Even with this, I’m really impressed with the company and am thinking about adding it to my portfolio.
