Fintech stocks are a fickle bunch. Marred by misaligned operational models and falling prey to rising interest rates, many fintech stocks are in the gutter compared to last year.
Still, a handful of them are emerging victorious. For fintech firms able to navigate today’s tricky economic climate, early investors could emerge from the other side with a sizable gain.
These three fintech stocks offer stability amid economic unease while including rapid expansion prospects to further cement their position in global financial markets.
SoFi Technologies (SOFI)
SoFi Technologies’ (NASDAQ:SOFI) expansion into digital banking is certainly paying off.
Fintech investors should explore whether this cheap stock is worth adding to their portfolio. The company started as a small lender but now offers enterprise brokerage solutions, as well as checking and savings accounts. Its total offerings combine to make it a one-stop fintech shop for customers. In addition, investors will benefit from its range of offerings as it diversifies revenue streams.
One Truist analyst summed up the bull thesis well, as he increased his price target to nearly double what SoFi trades at today. In a note, he told investors that SoFi “is accelerating deposit share, automating loan decisioning, focusing on members’ holistic financial health and providing a comprehensive suite of financial products and solutions is new,” he said. “Legacy banks do not and cannot replicate this model, in our view.”
Legacy banks struggle to adapt to changing trends as their sheer size limits how quickly they can pivot operational opportunities. However, SoFi doesn’t suffer from this institutional inertia. Thus, this stock is primed to explode for early investors.
PayPal (PYPL)
PayPal (NASDAQ:PYPL) is a long-time fintech leader, but it’s current position has plenty of upside. The company boasts a massive 41% of the global online payment processing market today. Its closest competitor, Stripe, holds a slim 21% of the market, making PayPal the undisputed leader in the space.
But PayPal’s recent fintech forays point to more opportunities ahead. The company recently jumped into crypto, offering a stablecoin to customers. This new operational segment gives crypto an air of legitimacy, attracting legacy customers to open new vistas for the fintech giant.
At the same time, PayPal’s current financial position is strong. In 2022, the company generated more than $5 billion in free cash flow. And management expects the trend to continue as we close out 2023. With plenty of room to expand its target market and sound financial management, PayPal might be the top fintech stock of today.
H&R Block (HRB)
H&R Block (NYSE:HRB) might seem a strange addition to a list of fintech stocks, considering the tax-centric company traditionally focuses on helping households file taxes. But in order to diversify, HRB’s offerings now include a range of fintech solutions.
In January, the company announced a mobile banking platform. As of April, Spruce has more than 291,000 customers who deposited more than $280 million. That new market isn’t yet expansive, but HRB’s early efforts to expand digital offerings point to a degree of adaptability to fintech trends.
At the same time, HRB’s new small-business financial management platform, Wave, is capturing additional fintech demand. That service’s revenue has expanded 10% year over year (YOY) since inception and is expected to contribute substantially to HRB’s bottom line.
For investors who want some income alongside fintech opportunities, HRB offers a hefty 12.27% total yield. The yield combines buybacks and dividends, benefiting investors anchoring their fintech portfolio with value opportunities.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
