The fintech industry has shown its resilience even in tough times. Despite an uncertain economy, a high inflationary environment and a long period of low consumer spending, financial companies have stood strong. This industry still hasn’t peaked. With the introduction of artificial intelligence (AI) and new technologies, the scope of fintech stocks room to run continues to expand.
Besides tech, I believe the fintech industry has shown tremendous growth over the past year. Adding fintech stocks to your portfolio can be a smart way to make the most of the industry’s growth. I’ve identified three companies that are enjoying strong momentum and will be an ideal addition to your portfolio this month. With that in mind, let’s take a look at the fintech stocks to buy this month.
Fintech Stocks to Buy No. 1: Visa (V)
Visa (NYSE:V) is a solid stock to buy before the company announces third-quarter results next week. The creme de la creme of the fintech industry, Visa has not only survived but also managed to thrive in market uncertainty.
With a global presence and over 4 billion cards in circulation, Visa is always at the right place at the right time. We are transitioning from cash to a digital economy and this means the demand for cards will always be on the rise. Whenever a user swipes a card to make the payment, Visa charges a fee. This is how it ensures steady revenue growth and low operating costs.
Trading at $272, V stock is up 5% year-to-date and 13% in the past 12 months. Since the majority of us always carry a couple of cards in our pockets, Visa will continue to grow. It enjoys a competitive advantage in the industry and has been rapidly growing over the past few years.
With anticipated interest rate cuts, there could be an improvement in consumer spending and this could boost its revenue. The stock has been a part of Warren Buffett’s investments since 2011 and has delivered impressive returns. The stock also pays a dividend and enjoys a yield of 0.76%.
Visa is set to report results on July 23 and the stock could rally after the positive results. In the previous quarter, it reported revenue grew 10% with an 8% rise in payment volume. Buy the stock before the results so you are not chasing it higher.
SoFi Technologies
I have been writing about SoFi Technologies (NASDAQ:SOFI) since January and the financial company has made solid progress.
The company is set to announce results next week and the stock is a buy before that. SoFi reported profitability this year and has shown an impressive user growth, proving its strength in the highly competitive industry.
The company started as a student loan provider and has become a highly diversified business today. A majority of its income comes from lending and with interest rates high, the company is making significant money from interest income. The net interest income for the first quarter stood at $402.7 million.
Trading at $7.53 today, SOFI has dropped 21% YTD and is down over 70% from its 2021 peak. It enjoyed an elite status as a fintech company in 2021 with low interest rates and the economy recovering from the pandemic.
The fundamentals are strong too. In the first-quarter, adjusted net revenue came in at $581 million, a 26% YOY jump and the company is aggressively investing in consumer growth. It also added more than 600,000 members, a 44% YOY increase. The management is aiming for a 75% rise in the financial services revenue this year.
I expect SoFi to beat expectations in the upcoming results on July 30 and this could boost investor confidence. Nevertheless, if you believe in the future of fintech, SoFi is a stock to buy and hold.
American Express (AXP)
Similar to Visa, American Express (NYSE:AXP) is a credit card company set to benefit from the changing user preferences and the shift from cash to digital payments. The company has been attracting Millennials and Gen Z users lately with over 60% of new accounts opened by young people.
Trading at $249, AXP stock is up 32% YTD and 40% in the past 12 months. As compared to the other three companies mentioned here, American Express has generated the highest returns over the past year and is trading lower than Visa.
The company is set to report results today July 19 and expectations are high it will beat estimates. It managed to beat forecasts in three of the past four quarters. In the first quarter, it generated an 11% YOY increase in revenue and a 34% YOY rise in net income. The company has a business model similar to Visa where it receives a small fee for every transaction processed on the card. It is on track to deliver 9% to 11% YOY revenue growth beyond 2026.
Its dividend yield of 1.12% also makes the stock more attractive and when it comes to dividend payout, American Express has the liquidity to increase the payout in the coming years. Investors should be prepared for good times with American Express.
On the date of publication, Vandita Jadeja 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.
