Investors are hungry for the growth that top tech and e-commerce stocks offer, but many of these stocks trade at impractically high valuations, and few offer dividends. This makes Kaspi.kz (KSPI) a rarity in today’s market—an overlooked revenue-rich tech stock with a cheap valuation and a dividend yield in excess of 7%.
I’m bullish on shares of this underappreciated e-commerce player based on its attractive long-term growth potential, inexpensive valuation, and mouthwatering dividend angle. As an added bonus, Wall St. analysts covering the stock forecast a potential upside of over 30% over the next 12 months.
Kaspi was founded in 2008 and is based in Almaty, Kazakhstan. The stock debuted in the U.S. last January with a listing on the Nasdaq that raised $1 billion and was valued at $17.5 billion. The company subsequently canceled its listing on the London Stock Exchange based on low liquidity and trading volumes.
For the many investors who are not yet familiar with Kaspi, it is a ‘super app’ from Kazakhstan that provides users with a variety of services, including an e-commerce marketplace, payments, and fintech services such as buy now pay later (BNPL) banking, and lending. Customers can even renew their driver’s licenses using the app. The company also operates hundreds of walk-in branches across Kazakhstan, offering services directly to customers as one of the nation’s leading financial solutions providers.
U.S. investors can think of Kaspi as a combination of Amazon (AMZN), PayPal (PYPL), and Affirm (AFRM) all rolled into one company. In many ways, Kaspi is similar to more high-profile international e-commerce players like MercadoLibre (MELI) and Sea Limited (SE), which provide customers with an all-encompassing suite of these services in their respective markets.
Kaspi is firing on all cylinders, as each of its three business segments, payments, marketplace, and fintech, are growing revenue and net income by double-digits year-over-year. For example, during the most recent quarter, the payments segment posted 25% year-over-year revenue growth and a 25% year-over-year jump in net income; Marketplace reported a 43% increase in revenue and a 14% increase in net income, and Fintech recorded a 24% increase in revenue and a 15% gain in net income. All in all, it added up to consolidated 28% year-over-year revenue growth and 18% net income growth.
Last month, Kaspi took a controlling interest in Turkish e-commerce leader Hepsiburada (HEPS) by acquiring a controlling interest of 40 million Class A and 173 million Class B shares for $1.1 billion. The move brings Kaspi into the lucrative Turkish market and dramatically expands the company’s addressable market to 100 million people, a long-term goal of Kaspi management. For context, Kazakhstan has a population of about 20 million versus Turkey’s population of over 85 million, making this acquisition a game changer.
There is obviously integration risk, and much work remains to ensure the acquisition is successful and provides synergies. Still, it is an exciting strategic maneuver that positions Kaspi for significantly more long-term growth.
Despite this massive growth potential, Kaspi shares are remarkably cheap. In fact, they trade at just 7.6x forward earnings estimates, with consensus analyst estimates calling for the company to earn $13.41 per share in 2025. It’s difficult to understate just how cheap this is—right now, the S&P 500 (SPX) trades for over 25 times earnings, more than three times Kaspi’s valuation.
Companies that I would consider comparable to Kaspi are mega-cap e-commerce stocks like Amazon, MercadoLibre, and Sea Limited (SE). These stocks also tie in elements of fintech and other businesses and trade at much higher valuations. Amazon, the largest of these comps (and the only one based in the U.S.), trades for 34.3x 2025 earnings estimates, nearly five times Kaspi’s valuation.
Meanwhile, other non-U.S. comparables also enjoy much richer valuations than Kaspi. Uruguay’s MercadoLibre trades for an even higher 49.1x 2025 earnings estimates, while Singapore’s Sea Limited trades for 35.2x estimates.
These are all great businesses in their own right, but it seems unjustified that Kaspi trades at single-digit earnings multiple while these other e-commerce players trade at multiples far north of the broader market.
I can think of the primary reason for Kaspi’s undervaluation is that its home market, Kazakhstan, is off the beaten path for most investors. Furthermore, the company is not yet known to most investors; it only debuted in 2019. Additionally, the company had to grapple with a short report from a short-seller that alleged it had ties to Russia during its first year as a publicly traded company in the U.S., which likely hurt its momentum. However, Kaspi has refuted the claims from the report, saying that being the first Kazakh company to successfully list on the NASDAQ has “obviously raised our profile” with short-sellers. At this point, nothing further has come from the short report, and the claims don’t appear to have gained much traction six months later.
The massive gap in valuations between Kaspi and its aforementioned peers illustrates how much potential upside lies ahead for Kaspi as it continues to grow and become more of a known entity to investors.
Unlike many of its peers in the fintech and e-commerce space, Kaspi is a dividend stock with a massive yield. Shares currently yield 7.11%, which is hard to beat in today’s market, especially a tech stock. This yield blows away that of the S&P 500, which currently yields just 1.3%, and easily beats that of 10-year treasury bonds, which currently yield 4.4%. Kaspi’s closest comps, like the aforementioned Amazon, MercadoLibre, and Sea Limited, do not pay dividends at this point in time, further underscoring Kaspi’s standing as a unique opportunity in the tech space.
Turning to Wall Street, KSPI earns a Strong Buy consensus rating based on three Buys, zero Holds, and zero Sell ratings assigned in the past three months. The average analyst KSPI price target of $134.33 per share implies a 31% upside potential from current levels.
I’m bullish on Kaspi, the emerging force in the international e-commerce space. Kaspi offers significant long-term growth potential in Kazakhstan and beyond, and it is the rare growth stock that trades at a low double-digit earnings multiple. Couple this inexpensive valuation with a 7% dividend yield, and Kaspi is a beautiful opportunity for long-term investors. Wall Street analysts are also supportive of the KSPI growth story and their northward price targets reaching for over 30% upside later this year. Given the confluence of factors, I think KSPI is a small but appreciative tech stock with a difference.
