The investment world is vast and varied, with top fintech stocks trading at attractive levels. Despite the sideways trading pattern that has prevailed since the stock market rout last year, these stocks offer some of the best entry points in the market today. Though most growth stocks have rebounded this year, the fintech space is lagging. This is evidenced by the largest exchange-traded fund in the sector in Global X FinTech ETF, shedding over 15% of its value last year.
Fintech stocks are returning to a more sustainable growth path following the monstrous growth experienced during the pandemic. However, this shouldn’t mislead investors about the sector’s long-term potential.
With that said, investors should keep an eye out for the most promising fintech stocks to buy. Given the rather depressed valuations, it’s imperative to identify high-potential fintech stocks and seize their present opportunities.
Top Fintech Stocks: PayPal (PYPL)
In the dynamic landscape of growth stocks, PayPal (NASDAQ:PYPL) stands out as one of the most compelling propositions. PYPL stock is trading at just 2.4 times forward sales estimates, roughly 68% lower than its 5-year average.
Nevertheless, its financials continue to impress, with it recently guiding for its 2023 earnings per share of $4.95, representing annualized growth of 20%. Moreover, its total payment volume increased by 12%, reaching a staggering $355 billion, with a 13% bump in the number of transactions to 5.8 billion. Despite concerns over slowing growth and heightened competition in the post-pandemic era, PayPal continues to flourish.
Additionally, its aggressive buy-back strategy, which resulted in more than a 3% drop in quarterly shares, reflects a bold commitment to shareholder value. This growth stock can potentially deliver multibagger returns in the coming years, with Tipranks analysts expecting a 51% bump in value.
Marqeta (MQ)
Marqeta (NASDAQ:MQ) has effectively carved a niche in the payment sphere, pushing the envelope with its innovative solutions. It is actively leveraging its open application programming interfaces (APIs) and webhooks to reshape the fintech sector actively. Its use of open APIs and tokenization-as-service technologies has set the stage for long-term growth for its business.
Despite prevailing economic challenges, Marqeta’s management remains steadfast in achieving an adjusted EBITDA margin of roughly 20%. Year-over-year sales growth for the firm is at a spectacular 39%, with forward estimates at over 28%.
Moreover, the company is looking to streamline its cost structure with strategic cost management and targeted hiring practices. Even more reassuring, the company has maintained a minimal debt load, carrying only $13 million to $20 million against a robust cash and equivalents position of over $1 billion in the past three years. Therefore, its rock-solid balance sheet strength underscores the company’s resilience and prospects for future growth.
Upstart (UPST)
Upstart (NASDAQ:UPST) is known for its popular AI lending platform, which has held up relatively well despite a challenging economic environment. While increasing interest rates have put a damper on its progress, Upstart delivered revenue and earnings beat across both lines in the past couple of quarters.
Its first quarter results tell a story of persistent growth, reporting revenues of $103 million, surpassing expectations by $3.2 million, and a better-than-expected adjusted loss per share of 47 cents.
As we advance, its foray into the home equity market could be a game-changer. With annual mortgage originations nearing the $3 trillion mark, even a modest market share could translate into a substantial revenue boost for the company. Moreover, the firm could offer substantial upside as banks regain their lending strength and Upstart’s AI model gains more traction. Analysts are on the fence over its current positioning, but it’s hard to deny its long-term potential.