In 2022, fintech suffered a huge blow. The sector saw worse stock performance than both the financial and tech sectors. Although rising interest rates hurt tech stocks, it hit fintech even harder because many relied on loans to operate their businesses. Furthermore, many fintech companies falsely believed temporary boosts from the pandemic to be permanent shifts in consumer behavior. That ended up not being the case, which hurt margins and forced companies to quickly slash expenses. Here are three battered and bruised fintech stocks to buy before a rise.
Bill Holdings (BILL)
Bill Holdings (NYSE:BILL) is a cloud service that simplifies financial tasks for businesses. It transforms traditional, paperwork-heavy tasks like expense management, payables and receivables into automated processes. This not only saves money but also improves accuracy.
Bill also boasts partnerships with many accounting firms, including big names like KPMG and PricewaterhouseCoopers. In finance, it collaborates with top financial institutions such as American Express (NYSE:AXP) and Wells Fargo (NYSE:WFC). This gives the company an advantage as many businesses already have existing relationships with these institutions which makes integration with Bill easier than its competitors
Overall, BILL is a great fintech stock with immense growth potential. It is uniquely positioned against competitors and is in good shape to endure macroeconomic conditions.
Marqeta (NASDAQ:MQ) is making significant strides toward revolutionizing the payment industry. The company is introducing groundbreaking payment solutions by leveraging open application programming interfaces (APIs) and webhooks.
MQ’s strategic positioning lies in the niche between conventional payment processors such as Visa (NYSE:V) and Mastercard (NYSE:MA), and newer, disruptive financial solutions like Klarna and Affirm (NASDAQ:AFRM). Marqeta’s use of open APIs and tokenization-as-service technologies allows it to play a role in creating a new generation of card issues, something that the traditional payment infrastructure lacks.
Even with the ongoing economic challenges, Marqeta’s management remains committed to achieving a long-term goal of an adjusted EBITDA margin close to 20%. It expects to reduce expense growth by implementing efficient strategies and targeted hiring practices. This approach, along with a less competitive hiring environment, is helping them secure key talent. In addition, it isn’t a debt-ridden firm, having carried only $13-20 million in debt each of the past three years against cash and equivalents of $1.2 billion.
The stock has fallen almost 20% year-to-date (YTD). However, in the past month, 3 out of 4 firms have reaffirmed their buying ratings. Which to me flags it as a fintech sock to buy before it rises.
PayPal (NASDAQ:PYPL) specializes in electronic and mobile payments for merchants and consumers.
PayPal is in high growth markets, as online payment processing will be a $198 billion market in 2032, growing at a 12% compound annual growth rate (CAGR). The buy now pay later market, which PayPal has recently entered, is also projected to grow with a 24.3% CAGR from 2023 to 2030.
PayPal’s most ambitious project is its vision of creating an all-in-one super app that will act as a bank, investment account and shopping app. As the trend of digitization accelerates, PayPal has the chance to become the only finance app people need. This will be a major revenue driver, Paypal reports that each service they have added increases the average revenue per account by 25%.
PYPL stock has not had a great year, falling almost 20% YTD. The consensus from analysts is that the stock should have an average price target of $94.40 and a low of $58, which is only slightly lower than its current stock price.
Amidst the sell-off, PayPal’s market leadership and upcoming revenue drivers make it an attractive undervalued fintech stock investment.
On the date of publication, Michael Que 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.