Fintech
Treasure hunt: 3 fintech stocks that Wall Street hasn’t discovered yet
The financial technology (FinTech) sector is expected to grow at an annualized rate of 16.5% until 2032, illustrating its potential. However, the information covers most financial assets technology stocks it is widely distributed. As such, most FinTech Stocks they are discounted or overvalued.
Considering the above, I decided to embark on a journey to find three overlooked fintech stocks that were worth investing in. Methodologically, I focused on fundamentals, valuation multiples and key operating parameters. Additionally, I emphasized event-driven elements to ensure each title was analyzed holistically.
Some investors may find FinTech stocks too risky. However, if you’re willing and able to take some risk, here are three overlooked fintech stocks worth considering.
MoneyLion (ML)
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MoneyLion (NYSE:ML) is a loan broker serving lower credit score borrowers. The company operates a new business model, integrated with more than 1,100 external partners to facilitate fee-based loan revenue, advertising revenue, and subscription revenue. Additionally, MoneyLion has adopted best-in-class machine learning technology, which allows it to evaluate numerous data points before brokering loans or adopting an advertiser on its platform.
The company recently proved its worth by releasing its first quarter earnings report. MoneyLion surpassed revenue estimates by $4.69 million. Furthermore, its earnings per share came in at 68 cents above target, demonstrating its underlying efficiency.
According to CNN, ML stock simply has four ratings from Wall Street, proving that it has yet to catch the attention of most analysts. Furthermore, key metrics suggest that ML shares are severely undervalued. For example, it has a price-sales ratio of simply 1.7xwhich is low for a growth stock.
I’m bullish here!
Nerd Wallet (NRDS)
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NerdWallet (NASDAQ:NRDS) operates a financial information platform. The company’s platform compares and evaluates numerous financial products ranging from personal finance to niche investments. While NRDS stock likely won’t reach mega-cap status, its business model is aligned with today’s world, which includes growth in retail investor participation and demand for financial literacy. Therefore, I think NRDS stock can reach new highs in the coming years.
When it comes to its key metrics, NerdWallet has a sparkling three-year compound annual growth rate of 34.19%. Additionally, NerdWallet has a gross profit margin of 90.81%suggesting it has inflation pass-through capabilities. Of course, the company has yet to reach profitability. However, it remains focused on growth and will likely emphasize residual shareholder value when the time is right.
According to MarketWatch, NRDS stock has seven Wall Street ratings. While that’s not a negligent valuation number, it remains low, suggesting that NRDS stock has yet to gain much traction among Wall Street analysts. Additionally, NRDS stock has a price-to-sales ratio of 1.8ximplying that it is undervalued, especially considering its resilient growth rate.
Hippo Holdings (HIPO)
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Hippopotamus holdings (NYSE:HIPO) is an insurance technology company geared towards short-term solutions such as property and casualty insurance. I am a big fan of online insurance technology as it caters to consumer convenience. Additionally, Hippo has formed a comprehensive set of partnerships, allowing it to benefit from synergies while providing its customers with an integrated process.
The company proved its worth by releasing its fiscal first-quarter report in May. Hippo beat estimates by reporting an increase in revenue $12.12 million, an increase of 1.14x year over year! Additionally, Hippo narrowed its net loss by 49% to $36 million.
Similar to the other stocks mentioned in this article, HIPO has earned a minimum of exceptional ratings on Wall Street. In fact, it has simply five ratings by Wall Street analysts, proving it’s a bit under the radar. Furthermore, the price-to-sales ratio of HIPO stock is 1.5x, which is low when considering its secular growth characteristics.
As of the date of publication, Steve Booyens 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 author, subject to InvestorPlace.com policies Guidelines for publication.
Steve Booyens co-founded Pearl Gray Equity and Research in 2020 and has since been responsible for cross-asset research and PR. Prior to founding the firm, Steve spent time working in various finance roles in London and South Africa. He holds a Masters in Investment Banking from Queen Mary – University of London. Additionally, Steve obtained his CFA Charter on April 26, 2024 and is working towards his PhD in Finance. His articles are published on various reputable websites such as Seeking Alpha, TipRanks, Yahoo Finance, and Benzinga. Steve’s articles on InvestorPlace form an interesting juxtaposition of mainstream opinion and objective theory. Readers can expect coverage on frequently traded stocks, REITs, fixed income funds, CEFs, and ETFs.