As time moves through the hourglass, so does the lifespan of sectors. One such domain is the financial services sector, which is experiencing rapid change.
The fundamental shift in the financial services sector is due to technological innovation. However, large banking entities have been slow to adjust their business models, due to cumbersome restructuring processes.
Therefore, early-stage financial technology, or FinTech, firms are provided the latitude to tap into the radical change experienced within the sector.
The FinTech market is forecasted to grow at 18.5% annually, substantiating my argument above. Given its systematic support, I decided to delve into the FinTech industry to look for three best-in-class stocks.
Methodologically, my screening process emphasized concept feasibility, fundamental prowess and asset pricing. Moreover, I touched on event-driven factors whenever necessary.
Without further ado, here are three FinTech stocks to consider.
Fiserv (FI)
Fiserv (NYSE:FI) is a global FinTech solutions company that operates ancillary to the banking industry by delivering payment processing solutions, point-of-sale systems, billing and payment features, and more.
The firm released a successful second-quarter financial report in July, illustrating its secular growth. A look at Fiserv’s salient numbers shows that its quarterly organic revenue grew by 18% while its GAAP-adjusted earnings-per-share surged by 39%.
Among Fiserv’s key drivers was its digital payments network, Zelle, which experienced a 43% quarterly increase in transactions. Additionally, Fiserv’s merchant solution, Clover, ascertained a 28% increase in quarterly revenue, showing that Fiserv’s vertically integrated model is taking shape.
FI stock has surged by nearly 20% since the turn of the year, dragging its price-to-sales ratio up to 4.76x. However, FI stock has a relative strength index statistic of around 51, showing that it has yet to reach overbought territory.
As such, Fiserv’s stock has plenty of runway left, especially if its growth attributes are considered.
Payoneer (PAYO)
Payoneer Global (NASDAQ:PAYO) provides customers with a multi-currency platform, emphasizing solutions for accounts payable and receivables. The concept is commendable, as currency risk management is growing in importance, due to the evolving nature of cross-border business.
Moreover, Payoneer provides generalized payment solutions to more than 190 countries, allowing its customers to record timely transactions without paying exorbitant transaction fees.
The company recently affirmed its competitive zeal when it delivered a promising first-quarter earnings report. Payoneer beat analysts’ estimates by surpassing its revenue target by $16.99 million and its earnings-per-share target by three cents.
Moreover, Payoneer revealed scintillating operating numbers as its user volume and active ideal customer profiles grew by 21% and 8% apiece.
PAYO stock has ticked up by more than 33% in the past six months. However, given its valuation metrics, I believe additional upside is warranted.
For example, PAYO stock has a price-to-sales ratio of 2.76x, which I consider low for a growth stock. Additionally, PAYO sports an enterprise value-to-revenue multiple of 1.63x, illustrating its scalability.
Although a risky bet, I’m bullish here, folks.
Adyen (ADYE.Y)
Adyen (OTCMKTS:ADYEY) is a Dutch company that offers a wide range of FinTech solutions, including transactional products, financing solutions, and business enhancement tools.
I added Adyen to this list as it has strong value propositions. For instance, the firm has partnerships with large firms such as Microsoft (NASDAQ:MSFT), eBay (NASDAQ:EBAY) and Uber (NYSE:UBER), which smooths its top-line prospects.
Moreover, as shown earlier, Adyen has a broad suite of offerings, allowing it access to synergies such as cross-sales and the sharing of human capital.
Furthermore, Adyen’s key performance indicators are robust. The company released a business update a little while back, showing stellar growth.
For example, Adyen’s digital processed volume surged by 51% year-over-year, while its unified commerce processed volume climbed by 30% and its platforms processed volume by 55%.
A composite view shows that Adyen’s first-quarter revenue settled at €438.0 million, approximately $478 million, playing into its broader five-year compound annual growth rate of 36.05% and a five-year average Return-on-Common Equity ratio of 26.77%.
Lastly, a contextualized look at Adyen’s financial market-based metrics is telling.
Adyen has a forward price-to-earnings ratio of 36.5x and a price-to-sales ratio of 17.63x. Some might consider these multiples too high.
However, Adyen’s comprehensive growth and synergies will lead to significant upside from here on in.
On the date of publication, Steve Booyens did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
