Fintech, or financial technology, is a sector that has been growing rapidly in recent years, offering innovative solutions for payments, banking, lending and investing. The best fintech stocks leverage digital platforms, data analytics, artificial intelligence (AI) and other technologies. They provide faster, cheaper and more convenient financial services to consumers and businesses.
In fact, the Ark Fintech Innovation ETF (NYSEARCA:ARKF) is an exchange-traded fund that manages around $1.2 billion in capital. And, it holds 39 fintech companies, including many well-known names. It has risen nearly 10% year to date (YTD). Despite this, a number of undervalued fintech stocks are opportunities for investors to research. Let’s explore three such stocks to buy this month.
Nu Holdings (NU)
Nu Holdings (NYSE:NU) is the holding company of the largest digital bank in Latin America, Nubank.
With over 90 million customers in Brazil, Mexico and Colombia. Nubank offers a range of products, such as credit cards, personal loans, savings accounts and insurance. While 94% of Nubank’s users are in Brazil, the company has made impressive strides to grow its business in its new markets, with Mexico being a main geography of interest. The Brazilian digital bank’s customer count in Mexico reached around 4.1 million as of their third quarter earnings report. In their fourth quarter report, the number of Nubank users in Mexico increased 34% to 5.5 million. This underscores the platform’s ability to grow in a relatively fragmented market in terms of fintech products and users.
Moreover, Nubank’s Q4 2023 revenue figures hit a record $2.4 billion, representing 57% year-over-year (YOY) growth from Q4 2022. Also, Nubank’s credit card and personal loan portfolios expanded to $18.2 billion, up 49% YOY, while deposits totaled to $23.7 billion.
Shares are up 43% in 2025 year to date (YTD). Yet, the companies valuation only floats around 5.5x forward sales and 30.1 forward earnings. If Nubank continues to break into Mexico, where the company has applied for a banking license to offer savings accounts, the company can expect strong growth for years to come.
Block (SQ)
Block (NYSE:SQ), formerly known as Square, is a pioneer in the U.S. fintech space. It offers a range of products and services for small to medium-sized businesses (SMBs) and individuals.
The company gained initial success with its point-of-sale (POS) systems and payment processing solutions for merchants. Nowadays, Block has broadened its ecosystem to include e-commerce tools, payroll services, business loans and banking services. Also, Block owns Cash App, a popular peer-to-peer (P2P) payment app that allows users to send and receive money, buy and sell stocks and cryptocurrencies and access other financial services.
Further, SQ ended 2024 on a good note. Block was able to beat Wall Street’s forecasts. The company’s fourth quarter revenue came in above estimates, and full-year revenue increased by 25% from 2022 to $21.9 billion. And, it showed it could balance solid growth with improvements in profitability. Gross profit increased 25% from 2022 while margins settled around 34%.
Finally, Block’s shares are up 9.35% YTD, and the company’s valuation is trading at 25.6x forward earnings. Furthermore, Block’s EV/EBITDA multiple is sitting around 19.5x forward EBITDA. Therefore, the fintech firm still has a lot of potential to continue growing its revenue and profitability in the long term and could make a good investment now.
Fiserv (FI)
Though Fiserv (NYSE:FI) is seen as a legacy financial services platform, it maintains its role as a global leader. Fiserv provides solutions for payments, processing, core banking, risk management and compliance.
Last year the company delivered a solid second quarter earnings beat. Then, there was a lot for existing and potential shareholders to be hopeful for. Fiserv has ample opportunity to grow its revenue and earnings in the future.
More recently, Fiserv’s Q4 performance showed again that the company could beat Wall Street’s estimates. In particular, both Fiserv’s revenue and EPS figures came in above analysts’ projections. While revenue grew in the high single-digits from 2022 to 2023, organic revenue grew by 12%. And, FI expects organic revenue to grow by 15% to 17% in 2o24.
Currently, Fiserv trades at 13.2x forward EBITDA, which places it multiple lower than a lot of large-cap tech companies nowadays.
On the date of publication, Tyrik Torres 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.
