The top 5 fintech companies to invest in 2024
Fintech refers to organizations that use innovative technologies in the financial sector, such as person-to-person payment applications and digital payment processing solutions. Despite the recent market decline, the fintech industry has significant long-term potential, making it an attractive investment opportunity. Consider the following five fintech stocks, which would be excellent additions to your investment portfolio:
Block
Block (SQ -4.97%) has transformed from a mobile phone-based credit card acceptance solution to a comprehensive financial ecosystem for small businesses and individuals. The company handles over $200 billion in card payments annually, has its own bank, and has a successful platform for lending money to small businesses. The Cash App, with 49 million active monthly users, offers direct deposits, debit cards, Bitcoin trading, and a user-friendly stock trading platform. Square Online is its merchant platform. It helps sellers develop an omnichannel presence, benefiting from e-commerce adoption.
PayPal
PayPal Holdings is the global leader in online payments, with its Venmo platform growing rapidly. The company has also acquired complementary businesses like Honey and invested in successful companies like MercadoLibre and Uber. With over $1.8 billion in free cash flow in the most recent quarter, PayPal has the financial flexibility to pursue opportunities. With 432 million active accounts in over 200 countries, PayPal is focusing on increasing user monetization and has massive long-term potential.
Bank of America
Bank of America, often associated with traditional banking, is more of a fintech than initially thought. CEO Brian Moynihan has improved asset quality and efficiency since the 2008-09 financial crisis. Technology has played a significant role, with the bank being named the No. 1 bank for online banking and mobile banking functionality by Javelin and the Best Consumer Digital Bank in the U.S. With a cheaper valuation and a 2.6% dividend yield, Bank of America is an attractive fintech option.
Adyen
Adyen, a payment processing company based in the Netherlands, offers payment solutions for businesses worldwide, including a large U.S. presence. It focuses on large businesses, such as Microsoft, Uber, and McDonald’s, and has processed over $700 billion in annualized payment volume as of mid-2022. Adyen’s growth has been impressive, with a 59% EBITDA margin and a 59% EBITDA margin that could improve as the business scales. eBay also turned to Adyen as its preferred payment processor.
MercadoLibre
MercadoLibre, also known as Amazon.com in Latin America, has a massive e-commerce business with over $30 billion in annualized sales volume. It also has a logistics platform (Mercado Envios) and a lending business (Mercado Credito), with Mercado Credito experiencing 146% year-over-year growth in the most recent quarter. The Mercado Pago payments platform, which processes over $120 billion in annualized payment volume, is the most exciting fintech business, growing faster than the e-commerce business. It’s like an earlier-stage PayPal that is developing into an impressive business.
