The traditional, staid world of finance continues to progress thanks to the innovation of these top fintech stocks to buy. The payments space is less and less about the transaction of fiat currency and more and more about digital channels.
Whether it’s mobile payments, digital lending or cryptocurrency, fintech is revolutionizing the way that people pay for services and goods. Fintech revenue growth will roughly triple that of banking firms through 2028. It is a strong argument in favor of investing in these top fintech stocks to buy.
As interest rates skyrocketed in recent years, these companies experienced a slowdown in growth. However, they are poised for renewal. Fintech companies will soon again be looking to capture the growth predicted from the sector as rate cuts are enacted. Now is a good time to be investing in these three top fintech stocks to buy.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is bringing Amazon-style e-commerce to Latin America and ensuring those customers have digital payment options at their disposal.
MercadoLibre’s most recent earnings report tells a strong story of a company that is not only growing on the top line, but doing so because of its fintech strength. Revenues increased to $4.3 billion, up 42% YOY in Q4.
None of that would have been possible if the company hadn’t worked as hard as it has to create a digital payments ecosystem for its primarily Latin American customer base.
The result of the company’s efforts is that payment volumes increased by more than 57% in Q4, reaching $56.5 billion.The company’s Mercado Pago credit card is now amongst the top five credit card payments on its platform. Overall, fintech revenues increased by 34% in the fourth quarter YOY.
Analysts have rated the stock a ‘strong buy.’ Realistically, MELI has the potential to increase by 50% in the near to midterm.
Nu Holdings (NU)
Nu Holdings (NYSE:NU) is another fintech stock geographically located in Latin America worth considering. Latin America has traditionally been under-served in terms of traditional finance.
Prior to Nu Holdings, the existing banks tended to overcharge for simple services. That provided a ripe opportunity for the fintech company, which entered the scene as Nubank back in 2013. Today, roughly half of Brazil’s population are Nu Holdings’ customers.
The company’s success in disrupting Latin American banking has led to rapid growth. That rapid growth has drawn the interest of Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), which currently owns $1.19 billion worth of NU stock.
Buffett has been historically skeptical of certain areas of fintech, such as Bitcoin (BTC-USD), so this large investment is a vote of confidence.
Nu Holdings continues to increase its cryptocurrency offerings making the stock somewhat of an anomaly as a Berkshire Hathaway holding. Nevertheless, it continues to be a stock worth considering, as Latin America catches up with the rest of the world in regards to banking and finance.
PayPal (PYPL)
PayPal (NASDAQ:PYPL) is one of the forefathers of all fintech stocks — but also one that has seen much better days. The payment platform is deeply undervalued when compared with its fintech counterparts.
That simple fact is likely to be the strongest argument in favor of investing in PYPL stock at this time. The company’s P/E ratio currently stands at 15.7. That is approaching its decade low of 15.04 and is well below the 10-year median of 47.
PayPal is reasonably discounted. The company is behind and other fintech firms have passed it over time. Yet, at the same time, PayPal is currently investing in AI based products and services under its new CEO.
The hope is that PayPal’s AI investment will revive the stock, which has suffered from worsening margins. The new CEO is branding 2024 as a transitional year that will revive the leading once leading fintech firm to its former glory.
On the date of publication, Alex Sirois 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.
