Financial technology (fintech) is growing at a rapid pace. In addition to payment processing platforms like PayPal (NASDAQ:PYPL) and Visa (NYSE:V), the sector helps companies automate traditional accounting and financial tasks. And as artificial intelligence (AI) continues to expand, it’s time to look at fintech stocks with huge potential.
Similar to the AI sector, there is no shortage of names in the fintech space. However, some of these names are flying under the radar even though they may be where the real growth will be.
It’s worth noting: there could be some headwinds for fintech stocks. High-interest rates and sticky inflation continue to point to an imminent recession if we haven’t already been in one. That could weigh on results for the next few quarters.
But the global economy is resilient. And when that engine starts to hum, fintech companies stand to be the largest beneficiaries.
Read on to learn about three under-the-radar fintech stocks with huge potential for investors. While they may not be household names today, they have the potential to deliver significant gains for investors in the future.
Shift4 Payments (FOUR)
One way that you can tell fintech is here to stay is that we don’t even notice it anymore, which is one reason to consider Shift4 Payments (NYSE:FOUR). The company delivers a “complete end-to-end commerce ecosystem” for over 200,000 total customers and over 3.5 billion annual transactions.
Shift4 Payments has an impressive list of sales partners including some of the biggest names in professional sports. However, a key reason why FOUR stock is one of the fintech stocks with high potential is its ability to customize solutions for different industries.
For example, the restaurant industry is notoriously complicated with low margins and a high failure rate. However, as Gabriel Osorio-Mazilli wrote recently, Shift4 allows restaurants to get paid an extra $1 per order for the first three months if they use the company’s point-of-sale (POS) system. They’ll also give a restaurant a bonus of up to $5,000 to switch from another system.
At 29x forward earnings, it’s not accurate to call FOUR stock undervalued. Even more promising, earnings are expected to increase by 32% in the next 12 months. And that growth is reflected in analysts’ estimates for a 39% increase in the company’s stock price in that time.
nCino (NCNO)
nCino (NASDAQ:NCNO) is taking a leadership role in the loan application and bank approval space. The nCino Cloud Banking platform was built specifically for the needs of the banking sector. To date, nCino has over 1,850 institutions using the platform, with Wells Fargo (NYSE:WFC) and Santander (NYSE:SAN) among its biggest names.
Growth like this doesn’t come without a cost. Even with a 20% gain this year, NCNO stock is down sharply since it first went public in 2020. However, in its most recent quarter, the company showed a profit to go along with its pattern of sequentially higher revenue.
In the short term, there may be slower growth as banks impose tighter lending standards in a higher-for-longer interest rate environment. That may keep some pressure on the stock. That being said, nCino is financially stable. If it continues to string together profitable quarters, investors may be rewarded by taking a small position and adding to it over time.
Adyen (ADYEY)
Adyen (OTCMKTS:ADYEY) is last but not least on this list of fintech stocks with huge potential. If you’re not familiar with Adyen, it’s likely because the company has a heavy presence in Europe. Since its founding in 2006, the Dutch company has expanded its footprint to include areas in the Asia Pacific, Latin America, and Africa.
However, North American investors should take note that every time McDonald’s (NYSE:MCD) processes a digital transaction, it goes through Adyen. And that’s only one of several blue-chip companies in the company’s stable. It’s also a favorite of Cathie Woods if that makes a difference for you.
In fact, Woods recently purchased about $9 million of ADYEY stock even as it reached a low for the year. Some of that may is likely due to the sharp drop in earnings the company reported in the last quarter. Still, if you’re looking for fintech stocks with huge potential, you’re playing a long game. And Adyen looks to be a stock that you can snag at a cheap price.
On the date of publication, Chris Markoch 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.
