In this article, we discuss the 10 best cash app stocks to buy now. If you want to skip our detailed analysis of the fintech industry, go directly to 5 Best Cash App Stocks To Buy Now.
The Covid pandemic accelerated the global shift towards digital payment methods. Cash app stocks, such as Paypal Holdings, Inc. (NASDAQ:PYPL), Global Payments Inc. (NYSE:GPN) and Visa Inc. (NYSE:V), a worldwide leader investing billions towards further digitizing payments around the world, are paving the way for a future where physical cash notes are made redundant.
These payment methods also include contact-less payment technologies ushered in by firms such as Alphabet Inc. (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL), where users can tap their phones at point-of-sale (POS) terminals to make instant transactions. According to a report, almost 30% of the average retail spending by US consumers (excluding ticketing, food and beverage sales) will be conducted using contact-less mobile payments by 2026. Wells Fargo analyst Jeff Cantwell recently noted that fintech firms currently boast a $1.5 trillion growth market opportunity, with annualized growth of 6% over the next 10 years. The most compelling factor driving this growth, according to the analyst, is the digitization drive where most consumers and merchants seek modern, digital ways of processing transactions. Another factor is the growth in the popularity of cryptocurrencies, which are traded exclusively through digital mediums, and the emergence of fintechs deploying a cloud-based “as-a-service model” to offer financial services such as e-wallet and account processing. Cantwell sees fintech stocks well-positioned to post outsized growth in earnings and revenue in the next two years, and outpacing the broader market.
Photo by Clay Banks on Unsplash
Given the extraordinary potential of the fintech industry to revolutionize modern finance in the coming years, investors would be wise to know which companies in the industry are worth betting on. Let’s now take a look at the 10 best cash app stocks to buy.
Our Methodology
A detailed examination of the fintech industry was carried out in order to identify 10 companies with the largest market share, most compelling products/platforms, future growth catalysts and positive ratings and reviews by Wall Street analysts. To measure each stock’s appeal among Wall Street investors, hedge fund sentiment has been provided, which has been calculated using Insider Monkey’s Q1 database of 900+ elite hedge funds.
Best Cash App Stocks To Buy Now
10. Fiserv, Inc. (NASDAQ:FISV)
Number of Hedge Fund Holders: 58
Fiserv, Inc. (NASDAQ:FISV) starts off our list of the best cash app stocks to buy now. It is a US-based firm which offers digital financial services, POS (point of sale) merchant acquiring, mobile payment services, and business management services. It operates through its brands Clover, and Carat.
On May 27, Tigress Financial analyst Ivan Feinseth kept his ‘Buy’ rating on Fiserv, Inc. (NASDAQ:FISV) shares, and raised the price target to $152 from $150. He noted that growing consumer spending resulted in strong Q1 results for the company, and recent acquisitions make it well-positioned to gain market share in the e-commerce and bank IT verticals.
For Q1 2022, Fiserv, Inc. (NASDAQ:FISV) posted revenue of $3.91 billion, which came in above estimates by $62.3 million. EPS was recorded at $1.40, exceeding Street estimates by $0.05.
A detailed examination of the 912 hedge funds in the database of Insider Monkey showed that 58 hedge funds were long Fiserv, Inc. (NASDAQ:FISV) at the close of the first quarter, with combined positions worth $3.87 billion. Its largest Q1 shareholder was Harris Associates, which held more than 24 million shares valued at $2.44 billion. This represented a 4% increase in holding over the previous quarter.
Investment firm ClearBridge Investments mentioned Fiserv, Inc. (NASDAQ:FISV) in its Q4 2021 investor letter, stating:
“While the threat of disruption risk to these established payment companies should not be taken lightly, it is important to note that many of these emerging disruptors are small relative to the massive global payments network and heavily reliant on the very payment infrastructure they are trying to disrupt. This led us to initiate a position in Fiserv, whose stock dropped to a level that embedded projections for negative long-term growth despite no current evidence of disruption. We think Fiserv will continue to grow despite perceived disruption risks given its scale and efficiency. Fiserv also owns cloud-based payments hardware and software system Clover, which is both bigger and faster growing than Square; this provides an additional degree of protection against further disruption risk.
Just like Paypal Holdings, Inc. (NASDAQ:PYPL), Global Payments Inc. (NYSE:GPN) and Visa Inc. (NYSE:V), Fiserv, Inc. (NASDAQ:FISV) is a top fintech stock investors are piling into.
9. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 64
Global Payments Inc. (NYSE:GPN) provides merchants, consumers and issuers with digital payment technologies and software solutions. It serves approximately 4 million customers in more than 100 countries around the globe. Popular hedge funds held major stakes in the fintech company at the close of the first quarter, with its largest shareholder being Orbis Investment Management with a $762.9 million stake. In total, 64 hedge funds were bullish on Global Payments Inc. (NYSE:GPN) at the end of Q1 2022, with combined positions worth $3.23 billion.
In the first quarter of 2022, Global Payments Inc. (NYSE:GPN) disclosed earnings per share of $2.07, beating analysts’ estimates by $0.03. The company pulled in $1.95 billion in revenue for the quarter, which fell below consensus estimates by $1.26 million.
On May 3, Citi analyst Ashwin Shirvaikar maintained a ‘Buy’ rating on Global Payments Inc. (NYSE:GPN) shares and set a $180 price target. He sees the shares offering a “remarkably attractive” buying opportunity at current price levels.
Oakmark Funds, an investment firm, discussed the market position of Global Payments Inc. (NYSE:GPN) in its Q1 2022 investor letter. Here’s what the fund said:
“Global Payments (NYSE:GPN) is a leading provider of merchant acquiring services. The company is also one of the largest providers of payment processing and related technology solutions to credit card issuers. We believe Global Payments’ merchant acquiring business is well positioned given its strength in software-driven payments. This is one of the fastest growing parts of the industry as small business customers are increasingly recognizing the efficiency benefits of having payments seamlessly integrated into the software they use to run their businesses. In addition, Global Payments benefits from the broader secular shift away from cash and toward electronic payment methods. Together, these tailwinds have the potential to drive low-double-digit revenue growth and even faster earnings growth. With this strong outlook and with management returning a significant portion of free cash flow to shareholders via repurchase, we think the stock looks attractive at its current valuation of just 12.5x next year’s expected EPS.
8. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 72
Shopify Inc. (NYSE:SHOP) operates an e-commerce platform, and also provides comprehensive payment solutions to merchants and businesses through its fintech brand Shopify Payments.
On May 6, Baird analyst Colin Sebastian maintained his ‘Outperform’ rating on Shopify Inc. (NYSE:SHOP) shares, and revised the price target to $630 from $1000. The analyst noted that the company’s weak Q1 results were understandable in context of weakening e-commerce trends observed as of late, and said that he continues to see compelling long-term growth opportunities for Shopify across payments, e-commerce, software and fulfilment. Jefferies analyst Samad Samana also had a bullish view on the company shares, and gave Shopify Inc. (NYSE:SHOP) a ‘Buy’ rating in late May with a price target of $475.
On May 11, Shopify Inc. (NYSE:SHOP) CEO Tobi Lutke announced on Twitter that he had placed a $10 million order for the company shares, in response to prominent venture capitalist Amish Jani commenting that the market has ‘over rotated’ on Shopify shares, allowing a great buying opportunity.
For the quarter ending March, Shopify Inc. (NYSE:SHOP) posted earnings per share of $0.20, missing estimates by $0.45. The company’s revenue for Q1 came in at $1.2 billion, also failing to meet expectations by $36.4 million.
As of the end of Q1 2022, 72 hedge funds held positions in Shopify Inc. (NYSE:SHOP) with a collective price tag of $5.78 billion. This is down from 86 hedge funds with $12.01 billion worth of stakes in the company a quarter ago.
Baron Funds, an investment firm, talked about Shopify Inc. (NYSE:SHOP) in its Q1 2022 investor letter. Here’s what the fund said:
“Shopify Inc. is a cloud-based software provider offering an operating system for multi-channel commerce. Shopify has been adopted by over two million merchants who processed $175 billion of gross merchandise volume in 2021, making it the second largest e-commerce player in the U.S. The stock corrected sharply in the first quarter, declining 51%, as a result of investor rotation out of fast-growing, long-duration stocks and after the company released quarterly results, expecting a normalization in the rapid growth it has experienced during the early stages of the pandemic. We remain shareholders as we believe Shopify has a long runway for growth addressing less than 1% of global commerce spending with a unique and competitively advantaged platform.”
7. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 77
Sea Limited (NYSE:SE) is up next on our list of top cash app stocks to buy. It is a Singapore-based company which offers comprehensive fintech services through its brands ShopeePay, SPayLater, and SeaBank. It also runs e-commerce platform Shopee.
On May 19, China Renaissance analyst Yi Sin Ngoh assumed coverage of Sea Limited (NYSE:SE) with a ‘Buy’ rating and a $118 price target, whilst noting that narrowing losses at Shopee and SeaMoney could support the the firm’s profitability in 2024. Credit Suisse analyst Varun Ahuja on April 27 gave Sea Limited (NYSE:SE) an ‘Outperform’ rating, and a price target of $205, down from $300. He remains bullish on the company’s long-term prospects, and sees the recent correction as a “strong opportunity to accumulate.”
For the first quarter, Sea Limited (NYSE:SE) announced an EPS of -$0.80, which outperformed consensus estimates by $0.42. The quarterly revenue was recorded at $2.9 billion, above analysts’ forecasts by $41.2 million and showing year-0n-year growth of 64.41%.
77 hedge funds out of the 900+ tracked by Insider Monkey reported ownership of stakes in Sea Limited (NYSE:SE) at the close of the first quarter, down from 108 hedge funds a quarter earlier. Its largest Q1 shareholder was Tiger Global Management LLC, which held a massive $1.61 billion stake in the company.
Investment firm Farrer Wealth Advisors discussed many stocks in its Q1 2022 investor letter, and Sea Limited (NYSE:SE) was one of them. Here’s what the fund said:
“Sea Limited had been selling off since its peak in early November of ~$363/share. This was driven by both a general sell off in tech, especially non-profitable tech, and a general belief that its gaming arm (Garena) was experiencing a slowdown due to its flagship game Free Fire. Free Fire has experienced a slowdown for three reasons: it is a victim of its own success, and by the end of Q321, nearly 10% of the world’s population already played the game, and thus reaching new users was difficult; A return to normal with people traveling/going out more and spending less time playing games; and the Indian market imposed a ban on the game due to anti-Chinese sentiment (Tencent is a large shareholder in Sea). We believed that these issues, while worth considering, were a bit overblown, and some of the data we saw from 3rd party sources showed that though Free Fire usage was dipping, it wasn’t too drastic. Thus, we marginally added to the position throughout the quarter. This was a mistake. During Sea’s earnings report in early March, the company guidance for Garena (down nearly 35% yoy) showed that the slowdown was far worse than predicted. Secondly, Shopee (Sea’s ecommerce arm) has pulled out of certain markets (in Europe and India), which long-term is probably the right strategy, but short-term hampers the optionality of the business. After considering this information and the guidance from earnings, we decided to significantly trim the position. In our opinion, management does have a bit of egg on its face from an overly aggressive expansion or as one investor called it, “bull market hubris.” We think management’s moves were mostly logical, it’s just that their failures came during an unforgiving market. While we believe that Sea’s future is still bright (especially with regards to their e-commerce and financial services), it will take a few quarters of strong earnings for them to regain their momentum, and for now the capital can be better spent elsewhere.”
6. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 84
Block, Inc. (NYSE:SQ) is a financial services company based in California. It runs Square, a payments platform which allows small and medium sized businesses to accept credit cards and use tablets as point of sale (POS) systems. It also operates Cash App, which enables quick and easy money transfers between users. In January 2022, Block, Inc. (NYSE:SQ) acquired AfterPay, a leading fintech firm that offers Buy Now Pay Later services.
Of all the hedge funds in the database of Insider Monkey, 84 reported holding positions in Block, Inc. (NYSE:SQ) at the close of the first quarter. This is in comparison to 96 hedge funds a quarter earlier. The firm’s biggest shareholder at the end of the first quarter was Cathie Wood’s ARK Investment Management, which owned a $1.12 billion stake in the fintech company.
On May 23, Truist analyst Andrew Jeffrey maintained a ‘Buy’ rating on Block, Inc. (NYSE:SQ) shares, and slashed the price target to $145 from $165. He sees a compelling opportunity for long-term investors, and notes that Block has potential to become one of the world’s most important fintech companies, rivalling big names such as Visa Inc. (NYSE:V). The analyst attributed the price target drop to reduced valuations.
Farrer Wealth Advisors, an investment firm, talked about Block, Inc. (NYSE:SQ) in its Q1 2022 investor letter. The fund said:
“Block (formerly Square): We ‘adopted’ Block’s stock after the company bought Afterpay, which we were investors in. We had been trimming the Afterpay position throughout 2021 and trimmed again after the acquisition, so the position was quite small. We held onto that small portion, as we did think the acquisition made sense and were excited to see the two companies integrate and for Block to create a closed loop network between merchants and consumers. However, the market punished most highly valued tech stocks over the last months, and we saw the position move against us by over 50%. We are firm believers that when a stock goes against you by 50%+, you need to do something about it. Either trim/sell and reinvest or buy more. In the case of Block, the original reason for holding was to see how the acquisition and integration with Afterpay panned out. The market did not give us the time to see this play out, thus we were not comfortable adding more to the position. Further for the stock to recover to our purchase price, we felt the company’s valuation would need to command a future exit multiple that the market would be unlikely to pay in this environment. Given this, we exited the remainder of the position.”
Along with Paypal Holdings, Inc. (NASDAQ:PYPL), Global Payments Inc. (NYSE:GPN) and Visa Inc. (NYSE:V), Block, Inc. (NYSE:SQ) is one of the best cash app stocks to buy now.
Click to continue reading and see 5 Best Cash App Stocks To Buy Now.
