Fintech firms make money more accessible and help people grow their wealth. These companies help people open bank accounts, brokerage accounts and more. The evergreen demand for money suggests that the best fintech companies can remain relevant for many generations.
Some banks have been around for centuries, but investors can look at newer companies for higher total returns. So, let’s examine some top fintech stocks to consider that have great potential.
SoFi (SOFI)
SoFi (NASDAQ:SOFI) is a digital bank that offers competitive rates and terms for its products. The company offers loans, bank accounts, portfolios, credit cards and other financial products.
True, the stock has been a roller coaster for investors, but the long-term picture is starting to look bright. Revenue increased by 37% year-over-year (YOY) in Q1 of 2024 as net income came to $88.0 million. And, the company reported a $34.4 million net loss in the same period last year, marking a big turnaround in the company’s GAAP profitability.
Now, SoFi has more than 8 million members, having grown its membership by 44% YOY. The digital bank added nearly 2.5 million members from Q1 of 2023 to Q1 of 2024. Also, SoFi achieved sequential growth of 7.8%.
Currently, Wall Street is mixed on the stock and has rated it as a hold. The average price target suggests a 29% upside from the present price point. The highest price target of $14 per share implies that the price can more than double.
American Express (AXP)
American Express (NYSE:AXP) has been around much longer than SoFi. The credit and debit card issuer was founded in 1850. The company started as a freight-forwarding company and transitioned to financial and travel services in the early 1900s. The company’s first paper charge card was issued in 1958.
In addition, the fintech firm is a top Warren Buffett pick, and it’s easy to see why. The stock trades at a 20 P/E ratio and recently reported 11% YOY revenue growth and 33% YOY net income growth in Q1 of 2024. Also, a relatively low valuation combined with strong revenue and earnings growth pave the way for positive long-term returns.
Moreover, American Express has done well in meeting that expectation. The stock is up by 26% year-to-date (YTD) and has more than doubled over the past five years. Most of the company’s new account openings came from Millennials and Gen Z consumers. So, American Express continues to win multiple generations, and its 1.16% yield means investors are winning, too. The firm has maintained an annualized dividend growth rate of 10.51% over the past decade.
Nu Holdings (NU)
Nu Holdings (NYSE:NU) is a Brazilian digital bank that is thriving in Latin America. The bank offers checking and savings accounts, credit and debit cards, brokerage accounts, loans and other financial products. It’s an all-in-one resource for a rapidly growing customer base.
The bank reached 99.3 million customers in Q1 of 2024 which is a 26% YOY improvement. Also, Nu Holdings reported 69% YOY revenue growth and 167% YOY net income growth in the same quarter. Those growth rates helped the bank close out the quarter with a 29.7% net profit margin.
Currently, Nu Holdings trades at a 45 P/E ratio and is up by 44% YTD. The growing digital bank has a $56 billion market cap. Also, customers are getting more active on the digital bank’s platform. Activity rate increased to a record high of 83.2% in the quarter. Analysts have rated the stock as a strong buy and have projected a 13% upside.
On this date of publication, Marc Guberti held a long position in SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
