Sea Limited, $SE, was a monster winner in 2020, rallying all the way up from $50 to $280. It recently came across my radar as I screened for stocks approaching new highs. There are a few things that are attractive to me about Sea Limited. First, the sustained, prolonged uptrend in 2020 is a sign of extreme strength and a clear sign of massive accumulation. For most of 2021, SE has been consolidating in a very large base. These types of bases offer enormous potential. It's almost as if all the pent-up energy acts as rocket fuel. Once released, it can result in immense moves higher. SE has really been tightening up recently, which is something I always like to see before a stock breaks out.
A company founded in Singapore, Sea Limited operates three businesses in the areas of entertainment, e-commerce, and financial services. Garena is their online gaming platform, Shopee is their ecommerce platform for Southeast Asia, and SeaMoney is their digital payment and financial service provider. A couple of things caught my eye when researching SE. First, it is a large-cap growth stock with a consistent track record of strong sales. Big liquid leaders like this are the type of stocks that funds tend to traffic into during strong bull markets. In addition, I believe the trend towards e-commerce, online gaming, and digital payments, which was accelerated due to COVID-19, will continue in the coming years. Finally, Sea Limited's management currently owns over 30% of its' shares, an indication that they too are bullish on the company's future. In addition, SE has seen a steady increase in fund ownership over the past year, indicating that institutions and hedge funds like what they are seeing as well. While I still believe there is the possibility of a summer shakeout in the coming weeks, I am closely monitoring SE for an entry point. When a stock like SE sets up, you don't want to miss the opportunity to own a true market leader.
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