The S&P/ASX 200 Index (ASX: XJO) has bounced back strongly on Tuesday and is up over 3% in early trade.
This follows a positive night of trade on U.S. markets which saw both the Dow Jones and Nasdaq indices recover from an early sell off to record solid gains.
While a large number of ASX 200 shares are pushing higher today, one standout has been the Afterpay Ltd (ASX: APT) share price.
In morning trade the payments company's shares have rocketed almost 8% higher to a new record high of $55.19.
It isn't just Afterpay on the rise today. The Zip Co Ltd (ASX: Z1P) share price is also up 8% to $6.26 at the time of writing. This puts it within sight of its record high of $6.97.
Today's gains mean that Afterpay's shares are now up 590% from their March low and Zip's shares are up almost 500% from their March low.
This has been driven by impressive sales and customer growth by both companies and the avoidance of a deterioration in bad debt levels during the pandemic. These positive metrics appear to have convinced the market that their business models are far more robust that many gave them credit for.
Can Afterpay and Zip shares go higher?
While the short term performance of their shares is difficult to predict, I believe over the long term their shares can go materially higher from here.
Thanks to international expansion, the increasing popularity of the payment method, and their massive market opportunities, I feel both companies are well-positioned to deliver very strong sales growth for many years to come.
Though, given the premium their shares trade at and the risks involved, I would suggest investors try to limit an investment in either of their shares to just a small part of a balanced portfolio.
I'm not alone in thinking they could be good options for investors. Earlier this month Morgans placed an add rating and $7.00 price target on Zip's shares and Bell Potter put a buy rating and $65.00 price target on Afterpay's shares.
