Is Raiz Invest (ASX:RZI) Worth Buying?

Raiz Invest (ASX:RZI) is an ASX small cap that appears set disrupt the funds management industry. This interview with Jason McIntosh appeared on Ausbiz on 15 December, 2020.

Host: Jason, Raiz Invest has come up in your algorithmic ASX scans. Tell us a bit about it.

Jason: Raiz Invest is a really interesting company. It’s has a market cap of just $78 million, so it falls well short of getting into the All Ordinaries. Raiz is a micro investment platform that operates in Australia, Indonesia, and Malaysia. They have an app that they’re targeting to the millennials, and the idea is that a user can automatically transfer small amounts of money from their linked account into the investment portfolio. And then it goes out to ETFs.

And they’ve got this really interesting feature they call it round up. So every time you buy something, it gets rounded up to the nearest dollar. The virtual change is then sent off to an ETF. So it’s meant to be a simple and painless way to invest.

On the investment side, they offer seven portfolios, from conservative to risker. The most interesting option includes an allocation to Bitcoin. Basically, it’s an innovative way to help people save, and at the same time, help the company to grow funds under management (FUM).

Raiz listed on the ASX in June 2018 at $1.80. The shares fell 22% on day one and kept falling for the next 12 months. And then the COVID crash hit the stock again. But there’s been a clear shift in sentiment over the last few months.

The stock appeared on my radar in late August with a few big up days on above average volume. The last few weeks have seen further gains on strong volume. But despite the gains, the stock is still well below its IPO price. My trending indicators suggest the shares could have a lot further to run over the next year or so.

On the fundamental side, FUM is up 30% to $453 million. And group revenue is up 57% to about $10 million. The company isn’t profitable yet, but it seems like a very scalable business. If they can get traction with their Asian expansion, and keep growing locally, it could really be a small-cap on the move. There’s also strong ownership from the board.

But the thing is, you gotta get these ideas before they appear in the ASX 200, because by then, they’re a lot higher. This is the beauty of using algorithms to find stocks that few people know about.


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Meet Jason

I'm Jason McIntosh, the creator of Motion Trader. My career began in 1991 on the trading floor at Bankers Trust. Nowadays, I trade my own systems from home in Sydney. 
Motion Trader is for investors who value robust analysis, data driven entry and exit signals, commentary, and education. I use engineered algorithms to identify when to buy and sell ASX stocks. No biases or guesswork, just data driven signals.