Late last month, yours truly here took a look at three fintech stocks to consider. Namely, I pegged Green Dot Corporation (NYSE:GDOT), Paypal Holdings Inc (NASDAQ:PYPL) and IHS Markit Ltd (NASDAQ:INFO) as underestimated opportunities that were likely to end up dishing out pleasant surprises as they win more than their fair share of the market.
Those were hardly the only compelling prospects in this fast-growing overlap of the financial and technology sectors though — there are plenty more fintech stocks with oversized upside most investors just don’t see.
To that end, here’s a run-down of three more interesting picks from this sliver of the stock market. They may not be center-stage names, as was the case with our first look at the financial technologies business back on May 29.
As was also the case three weeks ago though, all three of these organizations bring something unique (and marketable) to the table.
Fintech Stocks: Fiserv Inc (FISV)
The name Fiserv Inc (NASDAQ:FISV) may ring a bell, though many investors don’t remember why. The reason is, this company isn’t in the foreground anywhere, but is in the background everywhere.
Fiserv offers a variety of services to the financial services you lean on … banks, brokers and insurers. Namely, it provides payment processing, risk management tools and even customer-rewards programs. It’s likely the company has performed a task for your benefit, with you assuming your consumer-facing contact took care of it.
It’s still adding paying customers to its roster too. If you’re a customer of Dollar Bank, Fiserv’s Architect platform will soon be providing the backbone for the bank’s digital banking options, further growing its recurring revenue base.
It’s a two-edged sword.
On the one hand, the nature of its business is one that doesn’t facilitate huge waves of revenue and earnings growth. On the other hand, there’s much to be said for reliable revenue, even if it’s growing at a snail’s pace.
This year’s projected sales growth of 2.6% will heat up to a similarly un-blistering 4.7% next year, but this year’s expected per-share profit of $3.13 will almost certainly get to 2019’s projection of $3.51. That’s more certainty than most other fintech stocks can offer.
Fintech Stocks: Guidewire Software Inc (GWRE)Guidewire Software Inc (NYSE:GWRE) is yet another one of those “boring” insurance platform stocks that have a license to print money. Unlike Fiserv, however, Guidewire is headed into a period of red-hot growth… growth most investors are just overlooking.
Guidewire Software, as was noted, offers simplified and robust computing solutions to solve the unique problems of the insurance industry. Tapping the flexibility of the cloud, its InsuranceSuite melds customer engagement, operations and analytics into one platform that seamlessly integrates all facets of the insurance business.
The industry has certainly taken notice. Guidewire Software was recently named the recipient of not one but two policy administration awards by EMEA’s Celent, adding to a lengthening string of accolades.
Would-be paying customers have taken notice, too. Last quarter’s top line of $140.5 million was up 14% year-over-year, topping expectations while operating income of 5 cents per share easily trounced analyst expectations for a loss of 1 cent per share.
That’s just the beginning … analysts are calling for almost 27% sales growth this year followed by 20% growth next year, with per-share operating profits expected to grow at a similar pace.
Fintech Stocks: JPMorgan Chase & Co. (JPM)
Last but not least, add JPMorgan Chase & Co. (NYSE:JPM) to your list of fintech stocks to think about.
Yes, this is the same JPMorgan Chase that’s a mega-bank and broker, and has been around (in one form or another) for eons. These larger, stodgier players have generally been less inclined to — and less capable of — wading into fintech waters, but JPMorgan Chase has been a curious exception to the tendency.
Case(s) in point: JPMorgan has been on something of an investment spree, acquiring WePay (which powers GoFundMe) in December, which followed the purchase of MCX early last year. At the same time, it’s been partnering with payment startups like OpenFin, Stripe and Bill.com.
It’s not entirely clear where all this is going. And it may be mere coincidence that the bulk of the company’s deal-making thus far has focused on payments.
Regardless, JPMorgan Chase’s willingness to enter unfamiliar territory is interesting if for no other reason than it has enough reach and financial backing to really change the landscape of the fintech world in a way that suits the bank best.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.