Generally speaking, when you find fintech stocks to buy and hold, they will produce strong returns. Growth rates for the sector are expected to eclipse 25% annually for the next few years. So, it’s mathematically sound to assume that an average investor will do well overall.
Of course, there will be winners and losers within the sector. That said, long-term gains are most likely to happen for investors who take a moderate approach. Such an approach strikes a balance between growth and risk. It’s nearly impossible to identify the dark horse, unknown future champion in fintech or any other sector. Don’t waste your time trying to do that. Instead, choose established firms that are certain to evolve with the sector. These fintech stocks to buy and hold can leverage their resources to capture the growth in the sector while also growing your capital.
Fiserv (FI)
Fiserv (NYSE:FI) is a very moderate choice among fintech stocks. The company provides the back-office transaction processing that keeps financial systems moving. It’s the opposite of the flashy growth seen in other areas of fintech like crypto, for example.
It’ll provide the slow and steady growth that compounds over time. It’s durable and that will matter when the meme coins are dead and the initial capital directed into FI shares has compounded and grown. That’s likely to happen given that the company is expected to grow by roughly 6% between this year and next. Slow and steady. FI stock also has a low beta meaning investors won’t wake up one morning only to see that their capital placed in FI shares has drastically declined in value.
Behind-the-scenes firms like Fiserv do the grunt work that often goes unheralded. Yet, it’s that utility that is arguably the most valuable to any industry or sector. That’s a simple but powerful reason to buy Fiserv and firms across all sectors that serve similar functions.
Visa (V)
Visa (NYSE:V) is one of the biggest and best fintech stocks available to investors. The company provides financial technology as a credit card processor. It facilitates transactions and receives a nice fee for each time it does so.
The company is also leaning into the more exotic growth areas of fintech. It is expanding its blockchain presence which could serve to propel its business higher in the future. That said, the present is good for Visa and its investors.
Consumers are utilizing credit cards at increasing rates. They don’t have the cash that they did due to inflation and other factors and are charging more and more to their cards. That’s a boon for Visa evidenced by its earnings report from late July. Revenues increased by 12% leading to a jump in earnings of 25%. Travel is up leading to greater cross-border transaction volume which comes with greater fees.
Visa is a safe choice that is almost guaranteed to grow investor capital and a very strong fintech choice in general.
Block (SQ)
Block (NYSE:SQ) is the riskiest of the fintech stocks discussed here. It’s a much more modern firm within the financial space primarily comprising Square and Cash App. The point of sale payments system, Square, is responsible for the company’s early success and stock ticker. Cash App is a modern, peer-to-peer application that accounts for the slight majority of revenues and is geared toward a younger demographic.
A lot of its Cash App revenue comes from Bitcoin (BTC-USD). It’s another sign that Block is deeply entrenched in the future of finance come what may. That unpredictability makes SQ stock simultaneously risky and high-potential.
Block continues to grow rapidly while also producing losses. Some investors have grown discouraged by the fact that the company makes $5.5 billion in sales per quarter yet remains unprofitable. Losses basically halved in the second quarter. It won’t stay there forever and that’s one reason why Block continues to make sense as a long-term investment to buy.
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.