Financial services companies offer many essential products and services that help people stay on top of their budgets, acquire assets and achieve long-term goals. The demand for these services won’t go away, and research from Fortune Business Insights suggests high growth is here to stay.
According to the research, the global fintech market is expected to achieve a 16.5% compounded annual growth rate until 2032. Some companies in the industry will grow faster than others, and these variances present opportunities for investors. These three of the best financial services stocks to buy demonstrate plenty of promise in May 2024 and beyond.
Nu Holdings (NU)
Nu Holdings (NYSE:NU) is a Brazilian digital bank rapidly expanding in Latin America. After a slow start during its IPO, the stock has roared back and is up by 103% over the past year. Nu Holdings stock trades at a 56.5 P/E ratio, higher than most bank stocks. However, it’s also growing faster than most banks.
Nu Holdings grew its customer base by 26% year-over-year in Q4 2023. The digital bank has 93.9 million customers, translating into plenty of profits. Revenue almost doubled year-over-year while net income soared by a tremendous 221% year-over-year.
The fintech company offers loans, credit cards, bank accounts, investment accounts and other financial services. It has become an all-in-one hub for people who want to manage their finances. The stock is rated a “Strong Buy” with a projected 6% upside. The highest price target of $150 per share implies an additional 25% gain.
Visa (V)
Consumers regularly use credit and debit cards to buy goods and services. It’s hard to see a viable substitute dethroning this product. They are more convenient than cash and offer rewards like travel points and cashback for qualifying purchases.
Investors can choose from many credit card issuers, but Visa (NYSE:V) is the largest and has a reputation for rewarding long-term investors. The stock is up by 7% year-to-date and has gained 72% over the past five years.
Visa has delivered some solid gains over the years, and the firm’s Q2 FY24 results suggest more appreciation is on the way. The credit card issuer reported 10% year-over-year revenue and GAAP net income growth. GAAP EPS jumped by 12% year-over-year. Cross border volume was a key catalyst that grew by 16% year-over-year.
The fintech firm also offers a dividend. While the yield is only 0.75%, Visa’s dividend has grown at an annualized 18.05% over the past decade.
Robinhood (HOOD)
Robinhood (NASDAQ:HOOD) is one of the most innovative financial companies. The firm introduced commission-free stock trades, and other brokerage firms had to match it. Now, Robinhood is offering perks like 3% matches for IRAs, credit cards with unlimited 3% cashback on all categories, and a 1% boost on every deposit. You’ll have to use Robinhood Gold to get these products, but the subscription pays for itself over time.
Investors are realizing the long-term potential of Robinhood stock. Shares have doubled over the past year and are up 45% year-to-date. The company deals with bad press because the SEC looks closely at Robinhood’s crypto business. This short-term news item will likely be a small bump in the long-term story.
Nevertheless, Robinhood continues to grow. The firm reported 24% year-over-year revenue growth in Q4 2023. Net income came to $30 million compared to a net loss of $166 million in the same period last year.
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.
