Consumers and businesses always look for ways to get more mileage out of their money. Fintech companies can fulfill that objective with valuable products and features. Some of these platforms offer useful budgeting tools while others make it easier to process credit card transactions.
Fintech covers a lot of ground and offers compelling potential. Diversifying your portfolio into this vertical can lead to more gains, but not everyone wants risky stocks in the industry. These undervalued fintech stocks offer some upside without dangerous valuations.
Visa (V)
Visa (NYSE:V) is on its way to exceeding a $1 trillion market cap within a few years. The fintech company makes most of its money from credit and debit card transactions. The company’s business model resembles someone who sold shovels during a gold rush.
Visa has robust net profit margins that regularly exceed 50%. Revenue and net income growth have also been solid in recent quarters. For instance, the company reported 11% year-over-year net income growth and 19% year-over-year GAAP net income growth in the fourth quarter of fiscal 2024.
The company regularly distributes capital amongst its investors. The company rewarded shareholders with $5 billion in stock buybacks and dividends in the fourth quarter. Visa closed out fiscal 2024 with $16.1 billion in stock buybacks and dividend payouts in fiscal 2024.
The stock has gained 18% over the past year and is up by 90% over the past five years. Visa offers a 0.80% dividend yield and grows the dividend at a fast pace. The company elevated its quarterly payout from $0.45 to $0.52 per share, marking a 15.6% year-over-year increase.
Nu Holdings (NU)
Nu Holdings (NYSE:NU) is a rapidly growing fintech company based in Brazil. The crypto-friendly digital bank was the top-performing stock in Warren Buffett’s portfolio thanks to a 152% gain over the past year.
The company’s trailing 123 P/E ratio looks excessive but a forward P/E of 27 makes it look more enticing. Rapid growth in customers, revenue and earnings suggests the rally can continue.
The company added 5.4 million customers in Q3 2023 to reach 89.1 million total customers. Profits soared from $7.8 million in Q3 2022 to $303.0 million in Q3 2023. Revenue was up by 64% year-over-year.
The revenue and earnings boom comes from growth in multiple segments. For instance, the company’s active credit card customers grew by 23% year-over-year. Nu Holdings currently has 38.9 million credit card customers. Active personal loan customers reached 7.3 million and grew by 52% year-over-year. NuInvest active customers doubled year-over-year while SME accounts increased by 54% year-over-year.
These high growth rates across multiple verticals give Nu Holdings plenty of opportunities to reward shareholders.
Fiserv (FI)
Fiserv (NYSE:FI) is a valuable resource for businesses that are looking for financial services technology that helps with managing finances, paying workers, and other responsibilities. The company’s Clover software helps businesses manage various operations. Fiserv also works with banks, credit unions, large enterprises, and other entities.
The fintech company grew revenue by 8% year-over-year in the third quarter of 2023 and almost doubled its net income year-over-year. The “Merchant Acceptance” segment was the largest growth driver with 12% year-over-year GAAP revenue growth.
Fiserv leadership was optimistic about its earnings and raised its guidance for 2023. The company also plowed $1.2 billion into stock buybacks to reward investors.
FI stock currently trades at a 16-forward P/E ratio and a 0.85 PEG ratio. Shares have gained 32% over the past year and are up by 76% over the past five years. The stock currently has a market cap above $80 billion.
On the date of publication, Marc Guberti 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.
