In a recession-free global economy, these fintech stocks will excel.
PayPal Holdings (PYPL): The company continues to prioritize branded checkout, POS solutions, digital wallets, and AI-driven infrastructure enhancements.
SoFi Technologies (SOFI): SoFi aims to be the fintech industry’s equivalent of AWS.
Shopify (SHOP): The company exhibits strong growth and emphasizes enhancing profitability.
Buy these fintech stocks that show strong muscle as the industry continues to bloom.
The fintech sector, which provides investors with exposure to a blend of finance and technology, encompasses a wide range of companies. Firms operating in this realm focus upon innovation within the financial services realm. These creations can include creating digital payment solutions and peer-to-peer payment apps.
The recent market decline has impacted fintech stocks, and a wide range of growth stocks in the tech sector. Despite this, the fintech sector holds substantial long-term potential. Now could be a favorable time to identify strong, long-term investment opportunities.
So let’s take a closer look at three fintech stocks on my shopping list right now. On any major pullbacks, I think these companies may be worth considering.
PayPal’s (NASDAQ:PYPL) AI-driven insights, unique wallets, and smooth CEO succession plan underline its fintech strength. This is an advantage to both consumers and merchants.
The stock, now around $60 per share, offers a compelling opportunity for investment. With an 81% drop from its peak, the decline resulted from slowed user growth post-pandemic. Yet, potential remains due to buybacks and innovation. Despite recent stagnation, PayPal’s 431 million active accounts globally remain a strong foundation for revenue growth.
PayPal’s financials are steady and sustainable, showing a 7% year-over-year (YOY) revenue increase and improved margins. Despite missing estimates, non-operating expenses decreased by 11%. As digital payments thrive and eCommerce expands, PayPal’s broad user base and infrastructure remain significant. Over time, I think the company’s moat, derived from this strong and growing user base, could continue to drive its valuation higher.
SoFi Technologies (SOFI)
SoFi Technologies (NASDAQ:SOFI) emerged from a SPAC, unlike most, positioning itself as an exception with its Galileo and Technisys acquisitions. It strives to be fintech’s equivalent of AWS, aiding banks and fintech through its software stack.
SoFi leads in the student loan market, eyeing growth in refinancing many of the student loans, which are set for repayment in a month or so. Accordingly, it should be no surprise to investors that SOFI stock surged 81% this year, as investors look to get ahead of this massive demand surge in refinancing activity. The company’s financials show potential, with strong revenue growth and customer growth over the past year.
Moreover, SoFi’s all-in-one solution shows promise, evident in strong Q2 results and app popularity. Its innovative approach to banking offers potential gains for long-term investors looking past the company’s dominant position in the student loan debt market.
Shopify (NYSE:SHOP) endured an 86.6% decline in the 2022 bear market. Despite the drop, it’s a rare stock with remaining potential. Recent earnings beat expectations, showing 26% YOY sales growth. Managing costs for growth is crucial for satisfying shareholders.
Like Amazon, Shopify’s shares surged over four consecutive months, tripling from its low. Analysts forecast 20% revenue growth this and next year. Recent earnings underscore sales expansion and cost control, suggesting ongoing e-commerce growth potential.
Shopify’s Q2 loss stems mainly from restructuring, including staff reductions and selling its logistics unit. However, its Q2 revenue reached $1.7 billion, a 30% increase from last year. It’s notable that Cathie Wood often increases SHOP stock holdings during dips, adding shares to her ETFs.