The financial technology (FinTech) industry is forecasted to grow at an annualized rate of 16.5% until 2032, illustrating its potential. However, information about the bulk of financial technology stocks is widely dispensed. As such, most FinTech stocks are either priced in or overvalued.
Considering the above, I decided to embark on a journey to find three overlooked fintech stocks worth investing in. Methodologically, I focused on fundamental aspects, valuation multiples, and key operating metrics. Moreover, I emphasized event-driven elements to ensure that each stock was analyzed holistically.
Some investors might find FinTech stocks too risky. However, if you are willing and able to take on risk, here are three overlooked fintech stocks worth considering.
MoneyLion (ML)
MoneyLion (NYSE:ML) is a loan intermediary servicing lower credit score borrowers. The company operates a novel business model, integrated with more than 1,100 external partners to facilitate fee-based loan revenue, advertising revenue, and subscription-geared income. Moreover, MoneyLion has adopted best-in-class machine learning technology, allowing it to assess numerous data points before intermediating loans or adopting an advertiser onto its platform.
The company recently proved its worth when it released its first-quarter earnings report. MoneyLion exceeded its revenue estimate by $4.69 million. Additionally, its earnings-per-share settled 68 cents above target, conveying its bottom-line efficiency.
According to CNN, ML stock has merely four ratings from Wall Street, illustrating that it has yet to draw the attention of most analysts. Moreover, key metrics suggest that ML stock is grossly undervalued. For example, it has a price-to-sales ratio of merely 1.7x, which is low for a growth stock.
I’m bullish here!
NerdWallet (NRDS)
NerdWallet (NASDAQ:NRDS) operates a financial information platform. The firm’s platform compares and assesses numerous financial products ranging from personal finance to niche investing. Although NRDS stock probably won’t achieve mega-cap status, its business model is aligned with today’s world, which includes growth in retail investor participation and demand for financial literacy. As such, I think NRDS stock can reach new heights in the coming years.
As for its key metrics, NerdWallet possesses a scintillating three-year compound annual growth rate of 34.19%. Moreover, NerdWallet has a gross profit margin of 90.81%, suggesting it has inflation pass-through abilities. Sure, the company has yet to achieve profitability. However, it remains focused on growth and will likely emphasize shareholders’ residual value when the time is right.
According to MarketWatch, NRDS stock has seven Wall Street ratings. Although this is not a negligent number of ratings, it remains low, suggesting NRDS stock has yet to gain much traction among Wall Street analysts. Moreover, NRDS stock has a price-to-sales ratio of 1.8x, implying that it is undervalued, especially given its resilient growth rate.
Hippo Holdings (HIPO)
Hippo Holdings (NYSE:HIPO) is an insurance technology company geared toward short-term solutions such as property and casualty insurance. I’m a massive fan of online insurance technology as it addresses consumer convenience. Moreover, Hippo has formed a comprehensive suite of partnerships, allowing it to benefit from synergies while providing its customers with an integrated process.
The company proved its worth upon releasing its first-quarter fiscal report in May. Hippo strolled past estimates by delivering a revenue beat of $12.12 million, a 1.14x year-over-year increase! Moreover, Hippo trimmed its net loss by 49% to $36 million.
Similar to the other stocks mentioned in this article, HIPO has earned a low of outstanding Wall Street ratings. In fact, it has merely five ratings from Wall Street analysts, showing that it is somewhat under the radar. Additionally, HIPO stock’s price-to-sales ratio of 1.5x, which is low if one considers its secular growth attributes.
On the date of publication, Steve Booyens 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.
