Fintech
Stock market crash warning: 3 fintech stocks to buy when prices plummet
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Stock market crashes provide opportunities for long-term investors who can manage volatility and paper losses. You only lose money on a stock when you sell it, and some companies are ready to reward patient investors who stay strong during dips.
The fintech sector boasts many strong players that have the potential to outperform market returns. Some of these companies have the potential to become trillion-dollar companies, while others can generate exceptional long-term earnings. These are some of the fintech stocks to monitor in case the stock market undergoes a sharp correction.
SoFi (SOFI)
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SoFi (NASDAQ:SOFI) is a digital bank that offers many of the banking services you can find at traditional banks. It has loans, credit cards, bank accounts, insurance policies, investment accounts and other assets.
SoFi has made several moves to generate more mainstream appeal, such as naming rights to SoFi Stadium and becoming the official banking partner of the NBA. These efforts and others have helped the company add 585,000 new members in the fourth quarter of 2023. Financial results were also good. Revenue grew 35% year-over-year (YoY), while net profit was $48 million. This is a big change from the company’s net loss in the same period last year.
These realists have driven SoFi’s profit margin close to 8%. This is a big change for the company that could result in a more attractive valuation. SoFi doesn’t have many of the drawbacks common among financial institutions, such as high property taxes on thousands of branches.
Leadership also has a multi-year plan that suggests EPS will reach $0.55-$0.80 per share in 2026. Even after hitting these benchmarks, SoFi expects to generate year-over-year EPS growth from 2026. % to 25% beyond 2026. Reaching these milestones can make the stock attractive to long-term investors.
Nu Holdings (NU)
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Nu Holdings (NYSE:NU) is a Brazilian digital bank primarily serving Latin America. Shares have outperformed the market with a 33% year-to-date gain and a 112% increase over last year.
The fintech company has seen steady growth and generated a lot of excitement Fourth quarter 2023 print. The bank now has 93.9 million customers and grew its customer base by 26% year-on-year in the fourth quarter of 2023. The bank also grew its revenue by 66% year-on-year, while its net profit was increased from $58.0 million in the fourth quarter of 2022 to $360.9 million in the fourth quarter of 2023. Gross profit margin was approximately 48%.
High overall growth in the promising Latin America region suggests the stock can become an attractive long-term pick. Investors should monitor this stock closely for any declines. The stock trades at a P/E ratio of 56, but rising net income makes it easier to justify the valuation. The shares trade at a more reasonable price Forward P/E ratio of 25.
Visa (V)
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Visa (NYSE:V) is a reliable long-term stock due to its large market share in the credit and debit card industry. Consumers will continue to use their debit and credit cards for rewards, convenience, credit building and other factors.
Visa makes a small percentage of each transaction and the business model has worked wonders. The fintech company reported 10% year-over-year revenue growth and 12% year-over-year net profit growth second quarter of fiscal 2024. Cross-border volume was a key driver growing 16% year-on-year. CEO Ryan McInerney said consumer spending remained stable in the quarter.
Visa shares have gained about 70% over the past five years, and analysts believe the stock can continue to rise. The average price target suggests a 17% more from current levels. The higher price target of $340 per share suggests a potential gain of 27%. Visa is currently rated a Strong Buy by 23 analysts.
As of the date of publication, Marc Guberti holds a long position in SOFI. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com Guidelines for publication.
Marc Guberti is a freelance financial writer at InvestorPlace.com who hosts the Breakthrough Success podcast. He has contributed to several publications, including US News & World Report, Benzinga and Joy Wallet.