The global fintech sector is growing rapidly as its annual revenue will jump from $295 billion last year to $1.15 trillion by 2032. That would represent a very impressive CAGR of 16.5%. In developing countries, fintech can grow especially rapidly because many of the citizens of these nations do not have traditional bank accounts and rely entirely on fintech firms for all of their financial needs. Meanwhile, in developed nations fintechs are gaining market share from traditional financial institutions. For investors who want to exploit these trends, here are three fintech stocks to buy.
StoneCo (STNE)
Brazil-based fintech firm StoneCo (NASDAQ:STNE) reported strong fourth-quarter results on March 18. Its revenue revenue jumped 20% versus the same period a year earlier to 3.25 billion Brazilian rials. Meanwhile its EBITDA advanced an impressive 31.5% year-over-year to 1.62 billion Brazilian rials. And most impressively, its net income, excluding certain items, soared 177% YOY to 564 million Brazilian rials. Five Brazilian rials equal $1.
The company is targeting Brazil’s small and medium businesses in an effort to grow more rapidly, and that effort bore some fruit as its total payments volume from those customers grew 20% last quarter versus the same period a year earlier to an impressive 98.5 billion Brazilian rials.
The Brazilian economy is expected to grow a significant 2.2% above inflation this year, providing Stone and STNE stock with a meaningful, positive catalyst.
STNE stock has a very attractive, low forward price/earnings ratio of 12.7 times.
Nu Holdings (NU)
Like StoneCo, Latin American fintech firm Nu Holdings (NYSE:NU) reported very strong fourth-quarter results earlier this year. Specifically, Nu’s top line soared 57% in Q4 versus the same period a year earlier.
Also noteworthy is that Nu added an impressive net total of 4.8 million customers in Q4 while its monthly revenue per active customer rose 23% YOY, excluding currency fluctuations, to $10.60.
Meanwhile, Nu has multiple, strong, potential growth catalysts going forward. It says that it’s unlocking the untapped opportunity of our secured and unsecured lending portfolio. And gaining share in the upmarket segment in Brazil, and strengthening its presence in Mexico and Colombia with new products and features.
Nu’s rapid growth, quickly increasing profitability, and Buffett’s stake clearly make it one of the best fintech stocks to buy now.
PayPal (PYPL)
There was a great deal to like about PayPal’s (NASDAQ:PYPL) fourth-quarter results, and PYPL stock appears to be out of the Street’s doghouse. What’s more, despite the shares’ recent rally, they remain quite undervalued.
PayPal’s revenue climbed 8% in Q4 versus the same period a year earlier while its total payments volume jumped 15% year-over-year to $410 billion. And on the bottom line, its earnings per share increased meaningfully to $1.48 last quarter from $1.23 in Q4 of 2023.
Meanwhile, the Street appears to have become more bullish on PYPL as institutions either held or bought about 670 million of PYPL stock in Q4 while only selling 63.4 million shares.
Further, PYPL stock climbed 15% between March 6 and April 9. Despite their gains, the shares still have a very low, attractive forward price-earnings ratio of 13 times.
On the date of publication, Larry Ramer 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