The term “fintech” stocks can refer to any company that integrates technology into some kind of financial service. Because the definition is so broad, it can mean anything from robo-advisors to online exchanges to payment processors.
Nevertheless, technology and finance are two sectors that are likely to continue their upward trajectory. Thus, the marriage of those two sectors leaves us with strong investment possibilities in a space that is still emerging.
If you are looking to capitalize on the growth potential of fintech’s, below are some of the best fintech stocks to consider buying.
Best Fintech Stocks
Since you landed here, you already have some interest in fintech stocks. With that, let’s take a closer look at five of the best fintech stocks to buy.
No. 5 PayPal
Established in 1998 originally as Confinity, PayPal (Nasdaq: PYPL) was the original online payment processor. Its three co-founders included now-billionaire Peter Thiel and its business model initially involved developing security software for handheld devices. The company’s electronic payments system launched in 1999. That’s when we first saw the name PayPal. Since then, PayPal has become a Fortune 500 company with a ranking that puts it close to the top 100 by total revenue.
PayPal has done well as a company. But what about its stock? PYPL has a market cap of nearly $225 billion with a P/E ratio of 45.93 and an earnings per share (EPS) of 4.16. Its share price was under $90 in 2020 before soaring to over $300 in the summer of 2021. It has since cooled but remains more than double what it was in 2020. In addition, analysts consider this fintech stock a strong buy with a median price target nearly 50% higher than its current price.
No. 4 Block, Inc.
Square, which recently rebranded to Block (NYSE: SQ), is the company known for its square-shaped readers that magically turn devices like iPhones and iPads into fully functioning POS systems. One of the keys to the company’s success has undoubtedly been the fact that its card readers are free. It makes money via card processing fees and by selling items like its Square Stand and Square chip reader. As an online payment processor, Square has reaped the benefits of the increase in spending seen during the economic recovery.
Block has a market cap of over $77 billion. It does have a relatively high P/E ratio of 190 with an EPS of 1.00. Still, its share price is approximately five times what it was in mid-March, 2020. Analysts also consider this stock a strong buy with price targets around 50% of its current price. However, it’s worth noting that in the company’s most recent quarter, it posted a net income of just $84k. Nevertheless, its year-over-year (YOY) revenue was up nearly 27% with revenues of $3.84 billion, making it a great addition to your list of fintech stocks to buy.
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No. 3 MercadoLibre
Argentina-based MercadoLibre (Nasdaq: MELI) is a company that operates e-commerce and auction websites. It has several services to aid in the buying and selling of items online, including a platform to sell products, an online payment processor, an e-commerce platform and an advertising service. With so many different yet interconnected services, it’s clear that MercadoLibre has a winning business model.
The company’s stock, is a reflection of that. Its market cap is nearly $60 billion, though it does have a P/E ratio of just over 745, which is something to keep in mind. Its EPS is 1.58. Despite the high EPS, its net income is up more than 500% YOY, and analyst price targets are more than 75% higher than its current price. That is despite the fact that MELI has already more than doubled in price since the start of the pandemic.
Best Fintech Stocks No. 2 Fiserv
Another Fortune 500 company, Fiserv (Nasdaq: FISV) provides financial services to businesses such as banks, credit unions and broker-dealers. The company is based in Brookfield, Wisconsin, and was founded in 1984. The company has completed more than two dozen acquisitions since its founding, adding capabilities such as commercial banking, account processing, payment processing, and more.
FISV has a market cap of nearly $70 billion with a P/E ratio of 53.44 and an EPS of 1.93. This fintech stock hasn’t had quite the same sort of explosion as others mentioned here. Its price has gone from around $80 at the start of the pandemic to around $100. Still, Fidelity calls it undervalued, and analysts are bullish on the stock with price targets around 30% higher. Plus, the company has increased its net income by more than 62% YOY and had a profit margin of about 10%.
Best Fintech Stocks No. 1 Coinbase
Coinbase (Nasdaq: COIN) is one of the largest cryptocurrency exchanges available today and the company operates entirely online. While some of the more obscure cryptocurrencies are missing from the platform, all of the most common ones, such as Bitcoin and Ethereum, are available for trade. Plus, Coinbase has a slick interface that simplifies the process for end-users. It generates the majority of its revenue from transaction fees which in 2020 topped $1 billion.
Its stock, looks excellent at the moment as well, so it’s no wonder why many investors believe it to be one of the best fintech stocks to invest in. It had its IPO in April 2021 and already has a market cap of over $75 billion. Its P/E ratio of 21.55, and its EPS is 13.29. While not every analysis of this stock is quite so bullish, some do have price targets about 40% higher than its current price. Its balance sheet looks strong as well; Q3 2021 earnings show net income is up nearly 400% YOY, revenue is up over 300% and its profit margin was 31%.[/gated-content]