These fintech stocks to buy provide exposure to the digitalization of finance trend

If you’re optimistic about the potential for growth with the digitalization of finance, there’s plenty of promise fintech stocks buy. Even as macroeconomic uncertainty persists, a forward-thinking market looks beyond today’s problems and focuses on what lies ahead for the industry.

Around the world, business transactions continue to shift from being cash-based to becoming predominantly card-based or digital. This suggests that there remains a strong runway for companies operating in the payment processing and related industries.

Banking has gone digital and new generations prefer the convenience and speed offered by cutting-edge banking and financial services apps. This is good news for newly emerging banks and more diversified fintech companies that have moved into sectors such as banking and brokerage services.

Below are seven of the top fintech stocks to buy right now. Let’s dive in and see why each is worth a purchase at their current prices.

Shift4 Payments (FOUR)

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Shift4 Payments (NYSE:FOUR) provides digital payment processing services. Focused on fast-growing verticals such as iGaming and hospitality, earlier this year I praised FOUR’s growth is in good faith.

Earlier this month, the company reported its latest quarterly results. While Shift4 missed in both revenue and earnings, FOUR stock still missed recovering after earnings, thanks to the updates to the full-year outlook which largely reiterated the previous indications. Stocks could pull back now, following this post-earnings rally.

However, there is much more runway for stocks, even if forecasts indicate that growth will decelerate again next year. FOUR currently trades for 17.5 times its estimated 2024 earnings $3.67 per share and just 13.5 times estimated 2025 earnings of $4.75 per share. Regardless of whether FOUR undergoes a revaluation to a higher valuation, this will likely result in further strong stock price appreciation over the next 12 months.

Lesaka Technologies (LSAK)

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Earlier this month, I discussed how Lesaka Technologies (NASDAQ:LSAK), a fintech company based in South Africa one of the most promising penny stocks. LSAK has since broken through the penny stock ceiling, rising to around $5 per share.

However, although LSAK stock is quickly moving out of penny stock territory, it remains one of the best fintech stocks to buy. This is mainly due to the company’s potential awaiting the acquisition of the competitor Adumo. The acquisition of Adumo not only provides the opportunity to achieve significant cost synergies, but also expands Lesaka’s product offering.

The purchase of Adumo will also help Lesaka increase its share of the South African market, helping it diversify beyond southern Africa into another large African market: Kenya. LSAK may experience some short-term volatility following South Africa’s May 29 general election, although investors have been optimistic about a post-election relief rally for South African stocks.

Nu Holdings (NU)

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Nu Holdings (NYSE:NU) is another fast-growing fintech that should be on your radar. In addition to the domestic market, the Brazil-based company provides banking and other financial services to customers in large Latin American markets such as Colombia and Mexico.

On May 14, Nu Holdings reported results for the first quarter of 2024. As reported by InvestorPlace earnings, they came in with revenue of $2.74 billion and earnings of 9.1 cents per share. ahead of analysts’ forecasts. While NU stock, up more than 70% over the past year, hasn’t seen a massive upside to earnings, don’t assume this is a sign the stock is topping out.

Forecasts call for Nu earnings growth 71.85% this year and another 51.68% in 2025. Just like FOUR, even without multiple expansions, this level of high growth could help drive another year of strong gains.

Pagaya Technologies (PGY)

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Pagaya Technologies (NASDAQ:PGY) is a name I have previously noted as one of the best fintech stocks to buy. The Israel-based fintech specializes in using artificial intelligence to assess credit risk and underwrite loans. In this, it is very similar to a better-known AI fintech stock, Emerging participations (NASDAQ:UPST).

However, according to recent results, PGY stock is clearly the better choice than UPST. While Upstart keep fighting getting back into high growth mode and returning to profitability, is not a problem for Pagaya. Last quarter, network volume and net revenue increased 31% Year after year.

Although the company reported a net loss for the first quarter of 2024, forecasts call for positive net earnings per share (EPS) From $1.12 this year and $1.70 next year. With PGY trading at just $11.42 per share right now, it’s clear there will be big upside if subsequent results meet or beat these forecasts.

PayPal Holdings (PYPL)

Trading sideways over the last 12 months, the market overall continues to “wait and watch” when it comes to PayPal holdings (NASDAQ:PYPL) actions. Although the fintech giant recently reported excellent quarterly results, leading to a short-lived rally for the stock, PYPL has since retreated.

Investors are still waiting for the company to return to not only reporting strong growth in payment volume, but also strong growth in active accounts. However, while it may be difficult for PYPL stock to return to the highs above $300 per share, a partial rebound could be in the cards, driven by higher profitability rather than user growth.

As I argued earlier this month, turnaround efforts by PayPal’s new CEO, Alex Chriss, plus other moves like aggressive stock buybacks, it could lead to a level of earnings growth that helps justify a return to triple-digit prices for the shares.

SoFi Technologies (SOFI)

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Based on current sentiment for SoFi Technologies (NASDAQ:SOFI), it’s clear that few market participants would consider it one of the fintech stocks to buy right now. As I discussed recently, Wall Street and Main Street investors remain on the fence or even bearish on SOFI shares.

This is mainly due to concerns about Neobank’s fintech company and loan portfolio, as well as how SoFi values ​​these loans on its balance sheet. However, based on SoFi’s latest quarterly results, the market is likely missing the forest for the trees.

SoFi continues to grow at a steady pace, with net revenue, adjusted EBITDA and user numbers increasing medium-high double digits compared to the previous year’s quarter. Regarding the perceived risks with SOFI, Mizuho’s Dan Dolev arranged strong responses to concerns on the quality and growth of loans. It’s also worth noting that SoFi continues to expand its lending capabilities.

StoneCo (STNE)

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While domiciled in the Cayman Islands, digital payments and banking company Stone Co (NASDAQ:STNE) operates mainly in Brazil. STNE has made some roller-coaster moves in recent years, with shares nosediving in late 2021 and early 2022 due to the impact of Brazil’s post-COVID recession.

Since then, however, the improving macroeconomic environment has led to a strong rebound in StoneCo’s fiscal performance. That, in turn, has led STNE shares to nearly double from 2022 lows. With shares trading at just 10.4 times forward earnings, there’s plenty of room for revaluation, even though investors may be pricing in a jurisdictional risk, explaining the low multiple.

But even if STNE fails to experience multiple expansions, earnings growth could still drive further upward movement. As Seeking Alpha commentator Tristan De Blick recently argued, while the payments industry is experiencing slowing growth, StoneCo’s credit unit grows double digits.

As of the date of publication, Thomas Niel 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.

InvestorPlace.com contributor Thomas Niel has been writing individual stock analysis for web-based publications since 2016.

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