Make the most of the improvement in the economy with these must-buy fintech stocks
The fintech sector is always evolving, and is one of the most important aspects of the economy. While it has suffered during inflation and the high interest environment, things are looking a lot better now. The economy is improving, and we can expect a rate cut in the coming months. This means now is the best time to make your move and invest in growth stocks that show an upside potential.
Fintech stocks have attracted the interest of several investors after the banking collapse. With innovation and the latest technology, fintech companies are thriving. With that in mind, let’s take a look at the three must-buy fintech stocks in February.
Sofi Technologies (SOFI)
One of the must-buy fintech stocks is SoFi Technologies (NASDAQ:SOFI). The company has impressed investors with a blowout quarter and reported its first GAAP profit of $48 million, as promised. It has become a one-stop shop for all things finance and is trusted by many. After the banking collapse, many people are moving away from traditional banks and choosing fintech firms. Trading at $7.80, the stock is up 5% in the past year and looks highly undervalued to me. It has the potential to double your money, and its best days have just begun.
The company managed to beat expectations for revenue and earnings and has shown growth in several business areas. While the revenue was up 35% year over year to hit $615 million, it also saw a 44% YOY rise in the customer base.
Despite high inflation and a high-interest environment, we have seen the business thrive. Its financial services segment saw a 115% jump in revenue, and the lending division saw a 24% jump. The company also added 585,000 new members in the quarter and aims to add at least 2.3 million members this year.
The resumption of student loan payments has led to a rise in the demand for personal loans, and several borrowers have missed their first payment and are looking to refinance the loan. This is where SoFi is set to gain. It is in a solid position right now and has achieved a 30% gross margin. The solid growth looks promising, and SoFi is making phenomenal progress in the fintech space. This is a must-buy fintech stock this month. Buying SOFI stock below $10 could be a very smart move.
PayPal Holdings (PYPL)
PayPal Holdings (NASDAQ:PYPL) was at its peak during 2020, and this is when it reported record-high revenue and account growth. However, in 2024, a lot of that has cooled, and PYPL has become a beaten-down stock. The company is set to report fourth-quarter results in a few hours, and positive news will take the stock in the upward direction. In the third quarter, it saw the top line grow by 8% YOY to hit $6.8 billion, but the EPS dropped by 19% YOY and this disappointed several investors.
The company is highly attractive to merchants and consumers and it has a massive reach. It has a high payment volume and if it can continue to maintain the momentum, we could see the revenue and accounts increase in the coming years. Trading at $63 today, the stock is up 3% year to date but down 23% in the past year. In July 2021, the stock was as high as $300 per share. It has even dropped from the highs of $83 in Feb 2023 to $63 today and this means, there is a significant upside potential from here.
The fintech company is working to improve the business and has invested in Artificial Intelligence (AI). It has introduced several new features to ensure high customer satisfaction. PayPal has already carved a name for itself in the industry and it meets the needs of self-employed, small businesses, as well as several merchants.
While it may not be possible for the company to repeat the success of 2020, it can still see a strong upside from the current level. The management is focusing on reducing operating costs and increasing the number of customers through the right product offerings. PYPL is a strong player in the industry and a solid buy.
Visa (V)
One of the biggest names in the fintech space, Visa (NYSE:V) is much more popular than the other two companies mentioned here. It has a solid history and caters to over 100 million merchants. Visa’s business model has made it one of the best fintechs to own right now. It earns every time you use a Visa card. Whenever you use the card, the company will earn a fee and this ensures steady revenue while keeping costs at a minimum.
As one of the top players in the industry, Visa has a global presence and is set to benefit from digitisation. In the recent quarterly results, the company reported solid growth with the net revenue hitting $8.63 billion and a 17% jump in the net income. It saw a 9% rise in the processed transactions and an 8% rise in the payments volume.
There is no stopping the momentum of Visa as it aims for global expansion and a higher payment volume. It also offers add-on services that benefit several other businesses, and its acquisition of Pismo is a smart move in the current environment. Its global data centres and cloud-based solutions give it an edge in the industry.
The real reason Visa is a buy is its strong business structure and global market presence. The company has 15 years of steady dividend growth and enjoys a dividend yield of 0.75%. You will continue earning passive income with this investment.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.