In today’s economy, money remains a fundamental element, with numerous companies positioning themselves to capitalize on the increasing demand for financial resources. Consumers engage in spending, saving, and investing, often requiring loans to acquire goods and services. Fintech stocks provide investors the opportunity to benefit from these economic trends. Various companies within this sector offer innovative solutions to assist individuals in accessing funds and achieving their financial aspirations more quickly. This trend is not limited to consumers, as small businesses also partner with fintech firms to secure more capital and expand their customer base. The fintech landscape is extensive and brimming with promising opportunities. Let’s explore some of the leading fintech stocks worth considering.
Nu Holdings: A Rising Star in Fintech
Nu Holdings (NYSE:NU) has significantly outperformed the stock market, boasting a remarkable 44% increase year-to-date (YTD). This Brazilian digital bank is rapidly gaining market share across Latin America, establishing itself as the region’s leading digital banking institution. As of the end of the fourth quarter of 2023, Nu Holdings reported having 93.9 million customers, reflecting a 26% year-over-year (YOY) growth. The company’s ability to generate revenue from its expanding customer base has been impressive, with a 66% YOY revenue increase. Even more striking is the growth in net income, which soared from $58.0 million in Q4 2022 to $360.9 million in Q4 2023—an astounding 522% YOY rise. Additionally, Nu Holdings is diversifying its offerings, with customers increasing deposits, investments, personal loans, and credit card spending. The firm enjoys healthy profit margins and operates with lower overhead compared to traditional banks, resulting in enhanced earnings. Shareholders have seen promising returns over the past year.
American Express: A Trusted Financial Giant
American Express (NYSE:AXP) is currently trading at a reasonable P/E ratio of 19. The credit and debit card issuer is successfully expanding its profit margins and has set forth an ambitious multi-year growth strategy. The leadership team anticipates achieving 9% to 11% YOY revenue growth and mid-teen growth in earnings per share (EPS) beyond 2026. Furthermore, the company reported impressive results in Q1 2024, indicating its ability to sustain these lofty goals, with revenue increasing by 11% YOY and net income rising to $2.4 billion—a 34% YOY improvement. American Express continues to attract younger consumers, with over 60% of new accounts opened in Q1 2024 belonging to Millennials and Generation Z. The firm offers a dividend yield of 1.21% and has consistently raised its dividend by an annualized 10.51% over the last decade, including a notable 17% increase this year, enhancing its appeal as a dividend growth stock.
SoFi Technologies: A Digital Banking Innovator
SoFi (NASDAQ:SOFI) is another digital banking entity making waves in the industry. By eliminating the need for physical branches, the company reduces overhead costs, allowing for more competitive rates and terms for customers. Although the stock has experienced volatility over the past few years, SoFi has recently reported solid financial outcomes. In Q1 2024, the company posted $645 million in net revenue and $88 million in GAAP net income, leading to a profit margin of 13.6%, marking a significant improvement. This quarter also marked SoFi’s second consecutive quarter of GAAP profitability. Additionally, the firm raised its full-year 2024 guidance, with revenue rising by 37% YOY and gaining 622,000 new members, bringing the total to over 8.1 million—a 44% YOY increase. As SoFi diversifies its offerings beyond lending, which saw a slight decline, it is gaining mainstream recognition, particularly as the official bank of the National Basketball Association (NBA), which will likely enhance its visibility. The stock currently holds a market capitalization of $7.3 billion, indicating significant growth potential.
Fiserv: Connecting Businesses to Financial Solutions
Fiserv (NYSE:FI) operates as a financial services provider that links businesses with financial institutions. Companies utilize Fiserv’s platform for payment acceptance, performance tracking, and sales enhancement. Once businesses start using Fiserv, the commitment required to switch platforms makes it challenging to change providers. The company boasts that over 70% of the world’s top brands rely on its services, which has translated into substantial returns for investors. The stock has risen 12% YTD and has seen a remarkable 75% increase over the past five years. Currently valued at $87 billion, Fiserv has a P/E ratio of 28. In Q1 2024, the firm achieved a 7% YOY growth in GAAP revenue, while its GAAP EPS soared by 39% compared to the same timeframe last year. The company reaffirmed its guidance, projecting organic revenue growth of 15% to 17% for the full year 2024, with analysts predicting a further 15% increase from current stock levels.
Robinhood: Disrupting the Brokerage Industry
Robinhood (NASDAQ:HOOD) is well-known for its brokerage platform, being one of the pioneers in offering zero-commission stock trades and making significant strides in the cryptocurrency realm. As one of the first brokerage firms to allow crypto trading, Robinhood is now focusing on expanding its innovative financial products. Investors are particularly interested in the company’s unlimited 3% cashback credit card, available to Robinhood Gold members, as well as its unique 3% match for IRA contributions—an offer that few financial institutions provide. Although the stock has decreased by 49% since its IPO, it has rebounded by 45% YTD, indicating investors are beginning to recognize Robinhood’s potential, particularly as it recently shifted towards profitability.
PayPal: A Leader in Online Payments
PayPal Holdings, Inc. (NASDAQ:PYPL), a global financial technology firm, specializes in online payment systems. Despite facing significant declines in recent years, the stock is now being viewed as an attractive value option. Shares have fallen by 41% over the past five years but have increased by 7% YTD. Trading at a P/E ratio of 16.5, PayPal maintains double-digit profit margins. In Q1 2024, revenue climbed by 9% YOY, with GAAP EPS rising by 18% YOY. However, the company anticipates a slowdown in growth in the upcoming quarters, which is reflected in its lower P/E ratio compared to previous years. For Q2 2024, PayPal expects revenue growth to be between 6.5% and 7% YOY, coupled with a slight decline in GAAP EPS for the fiscal year. The company projects a decrease from $3.84 per share last year to around $3.65 per share this year due to non-recurring positive impacts on the previous year’s EPS. After accounting for these one-time gains, the adjusted EPS for 2023 would indicate a growth rate of just 5.5% YOY for 2024. Although the growth may be modest, PayPal remains a leading payment method for over 400 million users.
Bank of America: A Resilient Financial Institution
Bank of America (NYSE:BAC) is recognized as a well-managed financial institution with a respectable yield of 2.58% and a P/E ratio of 13. The stock has appreciated by 10% YTD and is up 34% over the past year. Favored by renowned investor Warren Buffett, the bank continues to deliver strong profit margins, having generated $6.7 billion in net income and $25.8 billion in revenue—both figures showing a slight YOY decline yet resulting in a robust 27.2% net profit margin. Established in 1904 as the Bank of Italy, Bank of America has successfully weathered numerous economic cycles, including the Great Depression. Investing in such resilient companies can yield steady returns and robust cash flow. The bank recently celebrated its 21st consecutive quarter of account growth, adding approximately 245,000 new consumer checking accounts, bringing the total to 36.9 million. Furthermore, small business checking accounts grew by 2% YOY, reaching 3.9 million, while Wealth and Investment Management revenue increased by 5% YOY to $5.6 billion.
