As we ring in the new year, now is the time to ensure you get your priorities straight and invest in undervalued fintech stocks.
You might think to yourself, “Huh? The markets are bleeding red, and very few investment areas are spared.” But this could be a great opportunity for those looking to invest in the fintech space.
While well-known fintech stocks are out there, some undervalued fintech stocks can be just as lucrative — if not more so. These overlooked fintech investments often require research to discover their potential, but they can provide long-term growth and appreciation with lower risk than other possibilities.
However, it’s important to remember that due diligence is key before deciding which stocks are right for you.
We’ve done the fieldwork on these undervalued fintech stocks, and we think they’re worth it.
Intuit (NASDAQ:INTU) has released recent performance results and has exceeded analyst expectations. It reported revenue growth of 29% to $2.6 billion, which was better than the predicted $2.5 billion. Earnings-per-share growth is also healthy considering the macroeconomic environment, at 14 cents per share, which surpassed management’s expectations.
Intuit’s acquisition of Credit Karma and Mailchimp, both for premium prices, has proven to be a savvy business decision. Right now, these two investments account for a large portion of overall growth which sets the company up well for success in 2023. These acquisitions have been lucrative, and the company is not stopping.
Intuit also has purchased SeedFi, the company behind Credit Karma’s Credit Builder, for an unknown amount.
Credit Builder offers ambitious individuals an easy and effective way to build credit and increase savings. This innovative program enables borrowers to set up a line of credit and a savings account to which they can contribute regularly.
Intuit’s signature software is constantly updated and provides tools for people to file taxes, manage budgets, and do accounting work. Customers always need such services regardless of whether the economy is good or bad.
That’s the reason for its sustained success over the years. It looks like the company will continue to thrive for many more years.
The U.S. credit card industry is worth trillions of dollars, and Visa (NYSE:V) dominates this sector. That is why it is a key stock to look out for when analyzing undervalued fintech stocks.
Visa’s fourth-quarter report revealed a 22% full fiscal year revenue increase, bringing them to $29.3 billion. With its strong track record, consumers can look forward to reliable payment systems and services as Visa grows in 2023.
Furthermore, Visa shareholders know they can count on the company to look out for their best interests. With an impressive $18 billion in free cash flow for fiscal 2022, Visa has rewarded its shareholders with massive stock buybacks – exceeding $11.5 billion in the most recent fiscal year alone.
A commitment to shareholder-friendly policies of this scale further cement Visa’s standing as one of the world’s largest and most reliable payment companies, one that investors and customers alike can continue to depend on for years to come.
SoFi Technologies (SOFI)
SoFi’s (NASDAQ:SOFI) stock has demonstrated the perils of investing during these turbulent economic times, dropping a staggering 72% in the last year. But there is one bright spot for the financial services company.
The purchase of Golden Pacific Bancorp transforms it into a legitimate bank. It no longer has to outsource loans and deposit services as it can now provide both in-house, solidifying its position as a major financial player while also helping protect them against third-party risk moving forward.
SoFi’s transition from a technology firm to a legitimate bank means it can offer better customer interest rates and services. Not only will borrowers get their loans approved faster, but also they can access more competitive interest rates. Furthermore, the new deposit services available through SoFi enable them to hold and sell loans to investors on a much larger scale.
The recent hammering of the stock should not deter value-oriented investors. SoFi initially focused on the student loan business. But after the pandemic, it diversified its business lines. That means the student loan forgiveness program does not impact it as much.
In a remarkable show of confidence, CEO Anthony Noto recently invested $5 million worth of stock. It demonstrates the company’s financial soundness and successful loan portfolio management.
NerdWallet (NASDAQ:NRDS) is invaluable to consumers seeking financial help and businesses eager to partner with them.
The company’s ability to secure profitable partnerships has allowed it to grow in recent years, but retaining customer loyalty and climbing Google’s ever-evolving search engine rankings are two vital goals NerdWallet must prioritize.
The team at NerdWallet understands that, for its service to remain effective, it must be taken seriously as a business. This ongoing commitment to integrity sets it apart from similar companies trying to capitalize on the growing market for financial advice.
The financial results reported by NerdWallet for the third quarter of 2022 certainly underscore the success of their financial services. Revenue reached a remarkable $142.6 million, a 45% increase over the same period last year, and exceeded analysts’ expectations by nearly $8 million.
The financial literacy provided by NerdWallet has resonated with investors in all stages of their financial journey. It also resulted in excellent gains for both NerdWallet and its customers. No wonder you will find this name on most lists of undervalued fintech stocks.
In an impressive move, Block (NYSE:SQ) has expanded its financial services suite beyond its original mobile credit card processing system. The company continues to exceed expectations with its ongoing growth and expansion.
Its Square Financial Services subsidiary demonstrates a further interest in providing comprehensive banking services. Additionally, Block has fully embraced small business lending and buy-now, pay-later services with the acquisition of Afterpay.
Block (which was named “Square” until the end of 2021) is a leading player in the ever-expanding fintech space. And it will undoubtedly play a major role in the industry for years to come.
Square is undoubtedly a major player in the business world. Its two most impressive offerings, Cash App and Square Online, are particularly impressive.
Cash App is used by millions of users every month, giving consumers multiple financial service options such as direct deposits, debit cards, and stock trading options – not to mention the freedom to buy and sell crypto.
Meanwhile, Square Online provides merchants with an amazing omnichannel presence. It makes Block one of the top undervalued fintech stocks in today’s market. It is essential in meeting the recent surge in e-commerce activities. These two components are key to Square’s overall success as a business.
Despite being the clear leader in the online payments space, PayPal (NASDAQ:PYPL) has diversified and expanded its business in many ways. Most notably, the wildly successful Venmo person-to-person payment platform has been responsible for unprecedented user base growth.
PayPal’s free cash flow is reaching $1 billion per quarter, a level of profitability that would make any company happy. That leaves it with a lot of spare cash to invest in new opportunities and maintain its strong position in the market.
PayPal has established itself as one of the leading industry players in digital payments. It enables over 429 million active accounts to transact in over 200 countries worldwide. The company has recently seen some slowing user growth. But PayPal is still working hard to develop inventive ways to monetize its expansive customer base.
With the help of data-driven insights from its thousands of customers, this company’s juggernaut continues to make strides in protecting users, increasing product innovation, and improving commercial solutions.
Heading into the new year, PayPal will benefit from strong holiday sales. Traditionally, it does well during this time. Alongside the secular growth in the digital payments industry, PayPal starts 2023 in good shape. That is why it is among the best undervalued fintech stocks to buy right now.
As one of the biggest e-commerce companies in its region, MercadoLibre (NASDAQ:MELI) has earned its nickname “the Amazon of Latin America.” Its massive e-commerce business boasts an impressive amount of annualized merchandise sales volume. Last year’s merchandise sales volume alone was over $30 billion!
On top of that, its logistics platform and lending business, Mercado Envios and Mercado Credito have seen serious traction in the last few years and could become a substantial part of overall revenue. As the number of users continues to grow, this company will likely maintain its success in 2023.
Mercado Pago is causing quite a stir in the financial technology industry. This payment platform has processed over $100 billion in annualized payment volume.
Mercado Pago is even more impressive because it’s expanding to target customers beyond those with an existing e-commerce affiliation with MercadoLibre, increasing its range of services. Furthermore, as opposed to card networks that rely on third-party institutions to process payments, Mercado Pago provides its users with both merchant acquiring and card issuing capabilities – putting them at the forefront of the fintech world.
On the publication date, Faizan Farooque 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.