3 Fintech Stocks Disrupting the Status Quo (and Your Wallet)
With rising innovations forcing disruption in multiple arenas, it’s inevitable that your money also faces a significant paradigm shift. As a result, investors ought to consider compelling financial technology (fintech) enterprises. Fundamentally, fintech stocks should benefit from the marriage of convenience and enhanced accessibility.
Primarily, the sector is a massive one. According to Fortune Business Insights, the global fintech ecosystem reached a valuation of $294.74 billion last year. By the end of this year, the sector may clock in a value of $340.1 billion. Ultimately, by 2032, the space could be worth over $1.15 trillion. If so, that would imply a compound annual growth rate (CAGR) of 16.5%.
What’s more, both the consumption and productivity end – that is, e-commerce and the gig economy – are pointing to greater integration of monetary transactions and technology. Therefore, it’s prudent to at least consider this burgeoning ecosystem. With that, below are compelling fintech stocks to put on your watch list.
Block (SQ)
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Formerly known as Square, Block (NYSE:SQ) represents one of the top-tier fintech stocks you can buy. For fiscal 2024, covering experts believe that the company’s earnings per share might rise 92.8% to hit $3.47. on the top line, sales could jump to $25.14 billion, up 14.7% from the prior year’s tally of $21.92 billion.
To be fair, the U.S. payment market size might expand at a compound annual growth rate (CAGR) of 23.5%. Seemingly, this stat makes Block appear relatively lightweight. However, it’s also important to realize that Block commands a significant presence in the small-business ecosystem. Further, with its payment systems and business management software, it offers core advantages for the burgeoning gig economy.
In other words, Block is a big fish and it could get bigger. However, the market doesn’t quite see it that way, which makes SQ all the more compelling as one of the fintech stocks to buy. Presently, shares trade hand at 1.69X trailing-year sales. However, in the three months ended March 31, 2024, this metric stood at 2.37X.
To emphasize the point, SQ features a discounted forward earnings multiple of 18.79X. Block should be on your radar.
MercadoLibre (MELI)
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One of the emerging global powerhouses among fintech stocks, MercadoLibre (NASDAQ:MELI) focuses on the growing Latin America sector. Primarily, MercadoLibre operates an online marketplace dedicated to e-commerce and online auctions. Just recently, Reuters reported that the company’s fintech arm has witnessed a credit-card reader boom in Mexico. That’s encouraging because, in Mexico, cash is still king.
If MercadoLibre is able to make inroads in such a challenging environment, it has the opportunity to expand in other key Latin American markets. Notably, analysts anticipate that for fiscal 2024, the company’s EPS may jump over 76% to hit $34.28. On the top line, sales may soar to $19.15 billion, a 32.3% increase from last year’s haul of $14.47 billion.
For fiscal 2025, EPS could climb heartily to $46.28, up 35% from projected 2024 earnings. Further, revenue may see another big leap to $23.58 billion, up 23.2%.
If there is a “weakness” regarding MELI, it’s that it commands a rich premium. Shares trade for 48X forward earnings and 5.15X trailing-year sales. However, for the latter stat, this metric did pop above 6X in Q4. From that perspective, it could be one of the fintech stocks to buy.
Pinduoduo (PDD)
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While it has a quirky name, there’s nothing funny about Pinduoduo (NASDAQ:PDD) – at least not when it comes to outright financial performance. With a market capitalization of just under $206 billion, the Chinese online retailer commands a massive footprint. More importantly, The New York Times detailed earlier this year how the Pinduoduo “rewired” Chian’s online shopping behaviors.
A decade ago, the usual suspects dominated China’s burgeoning e-commerce business. Now, seemingly all eyes center on PDD stock. Sure enough, analysts love the upside narrative. Among 14 expert voices, all of them rate shares a strong buy. Plus, the average price target stands at $217.75, implying nearly 47% upside potential.
In terms of financial targets, analysts anticipate EPS of $12.30 at the end of fiscal 2024. That would imply an expansion of 88% from the prior year. Further, revenue could hit $58.85 billion, up nearly 69% from 2023’s tally of $34.84 billion.
What’s interesting is that PDD stock trades hand at 5.2X trailing-year sales. That’s steep compared to the underlying retail ecosystem. However, in Q4, this metric stood at 7.66X. From that point of view, Pinduoduo could be a compelling deal among fintech stocks.
On the date of publication, Josh Enomoto 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.
