The financial sector has had a tough time since the beginning of 2023. With inflation and the banking crisis, it has been tough for banks and financial companies to win the trust of consumers. While it may take time to recover, there are top fintech stocks worth keeping an eye on. As we transition toward digital payments and see an increased adoption of card usage, three companies are making the most of this situation.
Investing in these fintech stocks will not only generate passive income but also lead to capital growth. While some are inching closer to their 52-week highs, many are far off their all-time highs. Fintech is always evolving and this means holding the stock for the long haul will be rewarding. Here are top fintech stocks to snap up right now.
Top Fintech stocks: Visa (V)
Visa (NYSE:V) is undoubtedly one of the top-performing stocks over the past year. Up 20% year-to-date (YTD), the stock has been moving in the upward direction despite concerns about inflation and low consumer spending. This is one fintech company that has tremendous potential to continue moving higher irrespective of market conditions.
One of the biggest payment companies, Visa has global operations and handles more than 200 billion purchases annually. It earns through a fee on every transaction and this ensures steady revenue and net profit. For a bigger ticket purchase, Visa will earn a higher fee. Hence, with inflation, the payment volume handled by the company rises, and so do the fees. Trading at $249 today, the stock is at the 52-week high, and it could be moving upwards to hit a new high very soon.
A solid reason to bet on the stock is the transition towards digital payments. With more merchants accepting the payments and the increase in card usage, Visa is set to gain over the next five years. For 2023, the company generated a net revenue of $32.7 billion and saw a 9% year-over-year (YOY) increase in the payments volume.
It is a business that can manage to keep the operating costs down while steadily growing revenue. Visa generated net income of $17.2 billion, which is up 15% YOY. It is also a dividend stock that enjoys a yield of 0.83% and announced a quarterly dividend of 52 cents. V is one of the best fintech stocks to own.
With the upcoming holiday season and an anticipated improvement in consumer spending, we could see Visa perform even better, and this is when the stock will be inching closer to $300. Now is the time to snap up this smart fintech stock.
SoFi Technologies (SOFI)
SoFi Technologies (NASDAQ:SOFI) is a platform that has changed the way we bank. It offers a one-stop solution for banking, investment, and borrowing, and while it did struggle during the pandemic, it is now acclaimed for its stability. With the banking crisis, people have started to trust SoFi and it is winning steadily. The business saw its deposit base grow to $15.7 billion from $7.3 billion in 2022.
The company isn’t profitable yet, and it isn’t posting the same level of revenue, but there is a lot of hope. Its financials show that it has the potential to continue generating income in the coming quarters. In the recent quarter, SoFi reported revenue of $537 million, up 27% YOY, and added 717,000 members during the quarter. It is a strong gain and one that shows a higher consumer confidence in the business.
With the resumption of student loan payments, we could see stronger business as consumers might come to it for refinancing purposes. The management has increased the full-year guidance and expects revenue to increase between 33% and 34%, up from the previous estimate of 25% and 30%. If we simply look at the number of student loan borrowers in the U.S., it is close to 43 million and this can provide a good base for SoFi to grow.
Trading close to $6 today, the stock is up 51% YTD. Buying it below $10 is a very smart move as the stock can double in the coming months. The management is optimistic about the future and expects to generate positive net income in the current quarter. SoFi has impressed investors in the past few quarters, and I believe its strong run has just begun.
PayPal (NASDAQ:PYPL) looks like a strong investment for multiple reasons. It has shown steady growth and profitability. Its recent quarterly reports show an 8% YOY increase in revenue to hit $7.4 billion. PayPal saw a 15% rise in the total payment volume and hit $388 billion. I think the new CEO can bring a huge opportunity for the business and could lead the company to an impressive growth path.
As long as the payment volume keeps growing, PayPal is in a good place since it earns a fee on the transactions that occur on the network. With a higher payment volume, there will be higher revenue. It has 428 million active accounts, and in a competitive landscape like today, this is nothing but impressive.
However, the number of active accounts isn’t growing, and while this might be a cause of concern for many, PayPal has seen a higher engagement of the users on the platform. It plans to repurchase $5 billion worth of shares this year.
Although down 24% YTD, PYPL stock is exchanging hands for $56, and this dip could mean a solid chance to buy. It is much lower than the 52-week high of $88, and I believe it has a strong market opportunity to grow. The company is holding strong in an uncertain economy, and while there are risks, there is upside potential to the stock.
On the date of publication, Vandita Jadeja 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 the InvestorPlace.com Publishing Guidelines.