Fintech
3 Fintech Stocks That Shake Up the Status Quo (and Your Wallet)
With growing innovations causing disruption across multiple domains, it’s inevitable that your money will also face a significant paradigm shift. As a result, investors should consider attractive financial technology (fintech) companies. Basically, fintech stocks they should benefit from the combination of convenience and greater accessibility.
First, the industry is huge. According to Fortune Business Insights, the global fintech ecosystem has achieved a valuation of $294.74 billion last year. By the end of this year, the sector could be worth $340.1 billion. Definitely, by 2032, space could be worth over $1.15 trillion. If so, this would imply a compound annual growth rate (CAGR) of 16.5%.
Furthermore, both consumption and productivity – i.e. e-commerce and the gig economy – point to greater integration of monetary transactions and technology. Therefore, it is prudent to at least consider this thriving ecosystem. That said, below are compelling fintech stocks to put on your watchlist.
Block (QS)
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Formerly known as Square, To block (NYSE:m2) represents one of the top-tier fintech stocks you can buy. For fiscal 2024, experts believe the company’s earnings per share could rise 92.8% to $3.47. On the profit front, sales could jump to $25.14 billion, up 14.7% from the previous year’s tally of $21.92 billion.
To be fair, the size of the US payments market could expand to compound annual growth rate (CAGR) of 23.5%. On the surface, this stat makes Block look relatively light. However, it is also important to realize that Block boasts a significant presence in the small business ecosystem. Furthermore, with its payment systems and business management software, it offers key benefits for the thriving gig economy.
In other words, Block is a big fish and could get bigger. However, the market doesn’t quite see it that way, which makes SQ even more compelling as one of the fintech stocks to buy. Currently, shares trade at 1.69 times trailing year sales. However, in the three months ending March 31, 2024, this metric stood at 2.37X.
To underline the point, SQ presents a discounted future earnings multiple of 18.79X. The block should be on your radar.
MercadoLibre (MELI)
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One of the emerging global powers among fintech stocks, MercadoLibre (NASDAQ:APPLES) focuses on the growing Latin American sector. Primarily, MercadoLibre operates an online marketplace dedicated to e-commerce and online auctions. Just recently, Reuters reported that the company’s fintech arm witnessed a Boom in credit card readers in Mexico. This is encouraging because, in Mexico, cash is still king.
If MercadoLibre can make its way in such a challenging environment, it will have the opportunity to expand into other key markets in Latin America. Notably, analysts predict that for fiscal 2024, the company’s EPS could increase by more than 76% to reach $34.28. In higher terms, sales could rise to $19.15 billion, up 32.3% from last year’s haul of $14.47 billion.
For fiscal 2025, EPS could rise quickly to $46.28, up 35% from expected 2024 earnings. Additionally, revenue could see another big jump to $23.58 billion, up by 23.2%.
If there is a “weak point” of MELI it is that it offers a rich premium. The stock trades for forward earnings of 48X and next-year sales of 5.15X. However, for this last statistic, this metric surpassed 6X in the fourth quarter. From this point of view, it could be one of the fintech stocks to buy.
Pinduoduo (PDD)
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Even though it has a bizarre name, there’s nothing funny about it Pinduoduo (NASDAQ:PDD) – at least not with regards to absolute financial performance. With a market capitalization of just under $206 billion, the Chinese online retailer has a huge footprint. More importantly, the New York Times explained earlier this year how Pinduoduo “rewired” Chian’s online purchasing behaviors.
Ten years ago, the usual suspects dominated China’s booming e-commerce business. Now, it seems, all eyes are on PDD stock. For sure, analysts love the bullish narrative. Of the 14 expert voices, all rate the stock at strong buy. Additionally, the average price target stands at $217.75, implying an upside potential of nearly 47%.
In terms of financial targets, analysts expect EPS of $12.30 at the end of fiscal 2024. This would imply an expansion of 88% compared to the previous year. Additionally, revenue could reach $58.85 billion, up nearly 69% from 2023’s tally of $34.84 billion.
What’s interesting is that PDD stock is trading at 5.2x sales in the trailing year. That’s steep compared to the underlying retail ecosystem. However, in the fourth quarter, this metric was 7.66X. From this point of view, Pinduoduo could represent an interesting operation among fintech stocks.
As of the date of publication, Josh Enomoto 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 InvestorPlace.com Guidelines for publication.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major deals with Fortune Global 500 companies. In recent years he has provided unique and critical insights to the investment markets, as well as various other industries, including legal, construction and healthcare management. Tweet it to @EnomotoMedia.