As a hotbed for innovation, top fintech stocks to buy have disrupted traditional financial services. They’ve delivered cutting-edge solutions bolstering efficiency and accessibility. Plus, the oversold fintech players are tapping into burgeoning markets, such as microfinance and “buy now, pay later” services, catering to the underserved. With this innovative potential comes the promise of exceptional long-term growth. And all could make fintech an enticing sector for investors with a high-risk appetite.
Although 2022 proved to be a challenging year for fintech stocks to buy, 2023 offers a more optimistic outlook. The tech-heavy Nasdaq-100 has been ticking upwards since the beginning of the year, pointing to a more conducive market for relatively risky stocks. That said, let’s dive into the most promising fintech stocks to buy for April.
Fintech Stocks To Buy: PayPal (PYPL)
PayPal (NASDAQ:PYPL) is a fintech trailblazer, boasting a massive 435 million-strong user base. Its user base has grown over 100% from 2017 to 2022, a testament to its superior brand equity and its penchant for innovating. It continues to push the envelope in the fintech realm with a suite of novel features and services that have resulted in over 3,000% growth in its revenue base from 2013 to last year.
2022 was a tough year for most businesses, which gave way to effective belt-tightening measures. In that department, PayPal’s management has done a remarkable job limiting operating expense growth to 2.7% in the past year.
PayPal’s potential for a robust recovery is evident in line with the economic snapback. Moreover, another key growth catalyst for the platform is its mobile app users, which usually engage in 60% more transactions per user. PayPal has enormous potential for growth with its mobile platform, with roughly 200 million accounts yet to embrace the app.
Credit-card giant Visa (NYSE:V) remains a titan in the realm of financial transactions. It boasts an unshakeable foundation, boasting spellbinding fundamentals, marked by 50%+ net, EBITDA, and gross profit margins.
The pandemic saw Visa’s revenues and earnings soaring to record highs following the surge in touch-free and eCommerce transactions. However, with the pandemic tailwinds fading, the resurgence in travel and tourism has unlocked new opportunities for Visa. Cross-border payments for the firm have grown by significant margins, dampening the effects of a recessionary shock on the macro economy.
The firm’s dedication to innovation and research has propelled it toward financial prowess. Delving into cutting-edge technologies like artificial intelligence, cryptography, and blockchain, Visa’s research arm is masterfully tackling the challenges in the fintech landscape. From a shareholder’s perspective, V stock boasts 14 years of consecutive growth in its payouts while being modestly undervalued, according to GuruFocus.
Fair Isaac Corp. (FICO)
Fair Isaac Corp. (NYSE:FICO), famed for its eponymous credit score, is a world-beater in analytics software and tools. Catering to diverse industries such as banking, insurance, and healthcare, FICO empowers companies with cutting-edge credit risk assessment, fraud detection, and decision-making solutions.
It operates a consistent business with an A-graded profitability profile and robust single-digit revenue growth over the past five years. The company has recently diversified its revenue base to expand into analytics, professional services, and digital decision-making. The fruit of its efforts is evidenced in its most recent results, where its software annual recurring revenue (ARR) was up 11%, while score revenues were up by just 5%.
Furthermore, it could have a major role in the AI sphere with its recent State of Responsible AI in Financial Services report highlighting the growing demand for AI in the finance sector. Given the gaps in company-specific AI policies, it can make a ton of money from the niche with its software suite.
Fintech player Toast (NYSE:TOST) is transforming the game for eateries of all sizes by automating critical processes. Though it sports a modest market cap compared to other companies on the list, its growth potential is sky-high as it marches toward profitability. By fiscal 2024, analysts expect its loss-per-share to narrow down to just four cents, a 92.6% improvement from 2022.
Toast’s all-in-one software platform powers a remarkable 74,000 restaurants across the U.S. and is just beginning to tap into a colossal market of over a million locations. The company’s impressive ARR skyrocketed from $326 million in 2020 to a whopping $901 million last year. Moreover, its net retention rate, an important gauge to assess the annual revenue generated from its loyal customer base customers, climbed from 121% in 2020 to 128% by the year-end. As Toast continues to expand its offerings, it’s undoubtedly a fintech force to keep tabs on for the long haul.
Intuit (NASDAQ:INTU) has established its position as a giant in the financial management and compliance space, catering to a customer base of 100 million globally. Its popular solutions, such as QuickBooks and TurboTax, have become ubiquitous over time. Moreover, it continues adding new services to its software suites, most recently adding live versions of its TurboTax and QuickBooks offerings. Additionally, it introduced live services to assist TurboTax’s Spanish-speaking clientele. It allows the firm to gain more traction with Hispanic small-business owners, which are growing significantly quicker than their non-Hispanic counterparts.
The firm has had an impressive track record of growing sales and earnings over the past several years. For instance, its gross margins have averaged 82% over the past five years, while revenue growth has hovered over 20%. It’s a small business, and the self-employed segment remains it’s most lucrative, which accounts for more than 60% of total revenue and is growing by double-digit margins. With projected revenue growth of 19-20% for fiscal 2023, the segment is poised to propel Intuit’s overall sales by 8% to 9%.
Block (NYSE:SQ) has faced a turbulent year, with its stock down over 60% last year. Moreover, its exposure to Bitcoin (BTC-USD) and other macro-headwinds weighed down its top and bottom-line results. Nevertheless, the strong showing in the past couple of quarters, Bitcoin’s resurgence, and the slowdown in interest rate hikes, points to an incredibly bright outlook.
Block has since evolved into a formidable force in the fintech space since rolling out its card reader service in Square. It later added the widely popular Cash App in 2013 and began exploring innovative ways effectively bridge the gap between the two ecosystems.
Enter the acquisition of Afterpay in Feb. last year, which had a dual effect of adding a novel “buy now, pay later” feature for Square sellers while empowering cash app users to have greater control. These efforts are part of its CEO Jack Dorsey’s vision of creating an “ecosystem of ecosystems” that continues growing the firm’s multi-billion dollar addressable market.
MercadoLibre (NASDAQ:MELI), is affectionately dubbed “the Amazon of Latin America,” boasting an eye-watering annualized merchandise sales volume of over $30 billion. However, its fintech marvel, Mercado Pago, is what is driving its growth story ahead. In its fourth quarter, its fintech arm posted revenue growth of $1.3 billion, a 74% improvement in U.S. dollar terms. Moreover, its total payment volumes rose over 45% to $36 billion.
Additionally, its impressive performance is bolstered by a 65% bump in its company’s loan portfolio to $2.8 billion during the quarter. Consequently, the firm swung to a quarterly profit, fueled by the spectacular performance of its fintech unit.
Mercado Pago is expanding its target customers beyond those with an existing eCommerce affiliation with MercadoLibre. The goal is to expand its total addressable market further and leverage its expertise in the eCommerce realm to grow its fintech base.
On the date of publication, Muslim Farooque did not have (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 the InvestorPlace.com Publishing Guidelines.