In this article, we will take a look at the global fintech industry and then discuss the 10 best fintech stocks to buy in 2024.
A Breakdown of the Global Fintech Industry
Based on a collaboration between the World Economic Forum and the Cambridge Centre for Alternative Finance, a report revealed that the global fintech industry has been strong post-pandemic with the average global customer growth rates above 50% from 2021 to 2022. In this growing market, fintechs are bringing tailored financial services and products to underserved segments of the population. These segments make up a sizeable portion of the consumer base of fintech firms operating in both advanced economies and in emerging markets and developing economies.
For the second year in a row as reported by CNBC, payments serve as the largest individual industry segment with a 24% share, although it is really fragmented with many firms moving money across the globe. Alternate finance which encompasses crowd-funding apps and online lenders follows with a 16% share. Other segments and their relative shares include 14% of neo-banking, 12% of wealth technology, 10% of business process solutions, 10% of banking solutions, 8% of financial planning, and 6% of digital assets. Country-wise, the US serves as the single biggest fintech market which hosts 46% of the top 250 fintech companies. Meanwhile, the UK hosts 12% while India is home to 4% of these companies. India has replaced both Germany and France due to its rapidly increasing digital adoption.
Current Landscape for Fintechs
In the prevailing industry landscape, fintech companies that are on the lower end appear to be better off. Previously, Bank of America’s CEO mentioned the consumer to be very stable and not getting worse. On the contrary, JP Morgan Chase COO Daniel Pinto warned that net interest income is going to be challenging next year with the expected Fed rate cuts just on the horizon. Ally Financial CFO talked about worse conditions as its borrowers are facing job market weakness as an increasing concern other than inflation.
In an interview with CNBC, Dan Dolev, senior analyst in fintech equity research at Mizuho, emphasized the rising consumer credit concerns. In his opinion, the fintech players with more exposure to the lower income consumers are doing better. He mentioned that low-end consumers had a lot of steamy money that they spent beyond their means. These consumers have pulled back on their spending to pay back their loans after depleting their savings 6 or 12 months ago. Meanwhile, the prime consumers are now facing the same pressure subprime consumers faced several months ago.
With that being said, let’s move to the 10 best fintech stocks to buy in 2024.
Our Methodology:
In order to compile a list of the 10 best fintech stocks to buy in 2024, we first used stock screeners and relevant ETFs to make an extended list of the relevant companies with the highest market caps. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best fintech stocks to buy in 2024 have been arranged in ascending order of their hedge fund holders, as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Fintech Stocks To Buy in 2024
10. Nu Holdings Ltd. (NYSE:NU)
Number of Hedge Fund Holders: 59
The Brazilian fintech company Nu Holdings Ltd. (NYSE:NU) works as the world’s biggest digital banking platform outside of Asia. The company serves more than 105 million customers across Brazil, Mexico, and Colombia. By number of customers, Nu serves as the fourth-largest financial institution in Latin America. The firm promotes financial access and caters to the complete financial journey of customers.
With its pace of customer growth exceeding expectations, Nu Holdings Ltd. (NYSE:NU) continues to be a rapidly expanding platform. For the fiscal second quarter of the year, Nu added 5.2 million new customers, 20.8 million year-over-year, while the activity rate climbed to a new record high of 83.4%. The firm has successfully become the institution with the largest number of active customers in credit operations. Simultaneously, revenues climbed 65% year-over-year to a record high of $2.8 billion. The regional footprint also remains strong with Nu being the primary banking account for 60% of monthly active customers in Brazil, growing deposit yields in Mexico, and crossing the 1 million customer mark in Colombia.
Other than driving strong customer acquisition, Nu’s business model fuels its multi-product growth. The core products including credit cards, digital accounts, and unsecured lending have almost 42 million, 78 million, and 9 million active customers respectively. Investments are used by over 18 million users while the company’s insurance product has 2 million active policies.
With the position of one of the best-capitalized players in the region, expanding customer base, success in introducing relevant new products, and robust top-line growth, Nu Holdings Ltd. (NYSE:NU) ranks among the 10 best fintech stocks to buy in 2024. As of Q2, the stock is held by 59 hedge funds while Berkshire Hathaway is the most prominent shareholder in the company.
9. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 59
Block, Inc. (NYSE:SQ) is a technology company focused on financial services. It is made up of Square, Cash App, Spiral, TIDAL, and TBD, all of which help people navigate the barriers to accessing the economy. Square offers an integrated ecosystem of commerce solutions, business software, and banking services for sellers to grow their business while Cash App allows sending, spending, or investing money in stocks or crypto. Spiral advances the use of Bitcoin by building and funding free, open-source projects whereas TIDAL is a platform for musicians and their fans. TBD eases access to Bitcoin and other blockchain technologies.
The growth of Block, Inc. (NYSE:SQ) remains at scale with the expansion of the firm’s addressable market over time. While Square represents an approximately $130 billion gross profit opportunity, Cash App represents a nearly $75 billion gross profit opportunity in the United States. Thus, the key businesses are strong. Backed up by the strength of software and banking products, Square cohorts in aggregate had positive gross profit retention in 2023 as compared to 2022 thereby representing recurring revenue streams. Furthermore, the gross profit from international markets is rising in the overall Square gross profit. With Cash App, the company has shown growth across diverse product areas including Bitcoin, financial services, instant deposit, and the BNPL platform.
The firm delivered a strong second quarter with its gross profit going up 20% year-over-year. Square gross profit increased 15% year-over-year while Cash App’s gross profit climbed 23% year-over-year thereby depicting the strength of these key businesses. Adjusted operating income was up 16 folds year-over-year. Recently, Block decided to reorganize its reporting structure by function for improved collaboration across the different ecosystems. For the 12 months ending in June 2024, Block had $1.43 billion in adjusted free cash flow, almost doubling from the preceding year.
The company’s potential for continued growth and profitability as mentioned above, its ability to generate substantial free cash flow, and its strategic shift to a functional organizational structure make it attractive for investors. Block, Inc. (NYSE:SQ) has 59 hedge fund holders, as of Q2 2024. Catherine D. Wood’s ARK Investment Management was the leading shareholder among these hedge funds.
8. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 66
Global Payments Inc. (NYSE:GPN) is a financial technology company that offers payment technology and software solutions to its customers globally. The firm empowers simple, fast, and secure payments for which it has built a worldwide commerce ecosystem comprising 4.6 million merchant accounts, 4,000 tech partners, 1500 financial institutions, and over 100 industries. Global Payments delivers seamless payments for every business, leading software for specific industries, single-source employer solutions, and better processes for buyers and suppliers. The firm is headquartered in Georgia and has 27,000 team members globally.
Global Payments Inc. (NYSE:GPN) is a Fortune 500 company and has a reach extending across North America, Europe, Asia Pacific, and Latin America. The company claims to lead the industry in innovation, scale, and service. It has a powerful ecosystem of brands across various verticals, including globalpayments, Heartland, greatergiving, AdvancedMD, ECSI, and touchnet among others. As a leading global payments technology company, the firm is currently streamlining its operations and simplifying its portfolio to provide product-led customer-centric solutions. This move is expected to increase the company’s share while freeing up capital to invest in innovation. Against the uncertain macro environment, Global Payments is diversified enough in terms of geography, vertical markets, and revenue streams.
As the worldwide partner of choice for commerce solutions, Global Payments Inc. (NYSE:GPN) shows a consistently strong performance. The company recently closed its second quarter with high single-digit adjusted net revenue growth and double-digit adjusted earnings per share growth. Adjusted net revenues rose 6% to $2.32 billion while adjusted earnings per share climbed 12% to $2.93. Merchant Solutions saw single-digit organic growth due to the firm’s differentiated capabilities across its integrated software and point-of-sale businesses. The integrated business witnessed double-digit growth with strong booking trends while the vertical markets businesses had a double-digit growth in software bookings.
During the month of August, the firm appointed Robert Bob Cortopassi as its new president and chief operating officer. Under the new growth-oriented leader who has a solid 12-year experience at the company, the firm is poised to grow. As of Q2, the company is held by 66 hedge funds thereby ranking on our list of the best fintech stocks to buy in 2024. Pzena Investment Management is the largest shareholder in the company.
7. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 68
American Express Company (NYSE:AXP) serves as a globally integrated payment company. The company started off as a freight forwarding company in 1850. It operates through multiple segments, including U.S. Consumer Services, Commercial Services, International Card Services, and Global Merchant and Network Services.
American Express has efficiently positioned itself as the world’s largest integrated payments platform. Its core business has continued to generate momentum through 2024’s first half which is evident from the recent results. This momentum is mainly driven by the loyal premium customer base which is known for its high spending and excellent credit profiles. The company reported strong second-quarter results with revenue reaching an all-time high while earnings grew 44% year-over-year. The growing scalability of the business can be seen from 24 consecutive quarters of double-digit growth in card fee revenue consistently and strong new account acquisitions.
Revenues of American Express Company (NYSE:AXP) have expanded by almost 50% as compared to 2021’s year-end while card member spending has risen by nearly 40%. Furthermore, cards in force globally have increased by around 23 million. The leadership position in providing payment products and services, strong growth momentum, and increased scale rank the firm among the 10 best fintech stocks to buy in 2024.
The number of hedge funds owning stakes in American Express Company (NYSE:AXP) was 68 in Q2 2024. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q2.
6. Fiserv, Inc. (NYSE:FI)
Number of Hedge Fund Holders: 73
Fiserv, Inc. (NYSE:FI) serves as a leading global provider of payments and financial services technology solutions. The firm enables money movement for financial institutions, people, and businesses. It was in 1984 that First Data Processing and Sunshine State Systems merged together to create a national data processing organization focused on the financial services industry, Fiserv. The company went public in 1986 and has grown over the years to become a Fortune 500 company. The company’s reportable segments include Merchant Solutions and Financial Solutions.
With more than 6 million merchant locations globally and over 25,000 financial transactions per second at peak, Fiserv, Inc. (NYSE:FI) has 40 years of experience in fintech and payments leadership. Through its integrated solutions, strong client franchise, and strategic positioning, the industry leadership position remains strong. This is evident from another year of double-digit organic revenue and adjusted earnings per share growth for Fiserv. The global growth just doesn’t stop here as the firm recently went live with its pilot merchant acquiring services in its new market New Zealand and continued to grow its instant payment transactions in Brazil and Argentina.
The firm delivered strong performance across the business in the year’s second quarter. With 6% growth in the Financial Solutions segment and 9% growth in the Merchant Solutions segment, the fintech recorded a 7% year-over-year rise in its adjusted revenue. Adjusted earnings per share also grew in the second quarter and in the first six months of 2024 as compared to the prior year periods. Thus, the company raised its full-year 2024 adjusted earnings per share outlook based on a strong first half of the year. Other highlights from the quarter include new clients in verticals such as petro, gaming, government, and healthcare, as well as major wins in the form of a strategic outsourcing agreement with Verizon and a partnership with Apple to enable new Apple Pay functionality with two of its next-generation solutions.
The stock was held by 73 hedge funds, as of Q2 2024. Harris Associates was the most prominent shareholder in the company. Hence, Fiserv, Inc. (NYSE:FI) is one of the best fintech stocks to buy in 2024.
5. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 82
Intuit Inc. (NASDAQ:INTU) is a global financial technology platform that allows consumers and small businesses to overcome their financial challenges. The company’s products include TurboTax, Credit Karma, QuickBooks, and Mailchimp which enable prosperity for approximately 100 million customers worldwide. While TurboTax does taxes from start to finish, Credit Karma works as an AI-powered platform assisting over 130 million members in the US in managing their financial lives. QuickBooks helps businesses with invoicing, expenses, inventory, and bank feeds. Mailchimp is an email marketing and automations platform.
As a global AI-driven expert platform powering prosperity for consumers, and small and mid-market businesses, Intuit has positioned itself well for durable long-term growth. The company mentions its investments in AI capabilities including knowledge engineering, machine learning, and GenAI, the scale of its data, and the large network of AI-powered virtual experts as its significant advantage.
The business segments of Intuit Inc. (NASDAQ:INTU) remain resilient and continue to be a strength. To better reflect the global reach of the Mailchimp and QuickBooks platform, the firm renamed the Small Business and Self-Employed Group to the Global Business Solutions Group. Intuit ended the fourth quarter and full year with robust financial performance. For the full year, total revenue was up 13% year-over-year, Consumer Group revenue was up 7%, Credit Karma revenue was up 5%, Small Business and Self-Employed Group revenue was up 19%, and Online Ecosystem revenue was up 20%. Simultaneously, the fourth quarter saw its total revenue increase by 17% to $3.2 billion.
The brand strength, robust segment-wise performance, solid financials, and AI investment which solidifies the firm’s strength in financial technology innovation make Intuit an attractive stock. Intuit Inc. (NASDAQ:INTU) is held by 82 hedge funds, as of Q2, with Fisher Asset Management as the most prominent shareholder in the company. The firm ranks 5th among the 10 best fintech stocks to buy in 2024.
4. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 84
MercadoLibre, Inc. (NASDAQ:MELI) is Latin America’s leading fintech and e-commerce company. With the agenda of democratizing commerce and financial services in Latin America, the company was founded 25 years ago. Hence, it enables e-commerce and digital financial services for its users through a complete suite of technology solutions. The firm has a presence in 18 countries including Argentina, Brazil, Mexico, Colombia, Chile, and Peru.
MercadoPago, the firm’s fintech platform, provides a comprehensive set of financial technology services. For individuals, it has a digital account offering a debit card, online payments, insurance, savings, investments, and credit lines. For merchants, it provides online and physical point-of-sale payment processing services and a digital account. With financial services ripe for disruption in the chosen markets, the company operates a fintech business that matches the lowest cost-to-serve in the region. This highly profitable business positions MercadoLibre for market share gains across the region. It is also building MELI+ with the goal of being the largest and most valued regional loyalty program. At the same time, the firm is a top digital commerce platform in Latin America, a region with one of the fastest-growing Internet penetration and e-commerce growth rates globally.
The firm delivered a strong top-line and bottom-line growth during the fiscal second quarter. With a 20% rise in gross merchandise volume and a 36% rise in total payment volume, the revenue increased by 42% year-over-year. Net income rose by 103% as compared to the prior year. The strength of MercadoLibre, Inc. (NASDAQ:MELI) across geographies is evident from revenue growth of 51% year-over-year in Brazil and 66% year-over-year in Mexico. The Commerce and Fintech revenue streams continue to grow, with 53% and 28% increases since 2023 respectively. Furthermore, the adjusted free cash flow of $678 million in Q2 and $838 million year-to-date demonstrates the firm’s ability to generate cash even when it is investing in other growth opportunities.
With a solid market cap of $102.91 billion, a diversified mix of revenue, and a significant potential for growth as a leading fintech and an e-commerce platform, investors can consider MercadoLibre, Inc. (NASDAQ:MELI). The company’s prior financial performance has also been consistently strong. Over the past 5 years, the company has managed to grow its revenue by 56.85% and its net income by 145.56%. As of Q2, the stock is held by 84 hedge funds while Generation Investment Management is the most prominent shareholder.
3. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 87
PayPal Holdings, Inc. (NASDAQ:PYPL) enables digital payments on behalf of merchants and consumers globally. The firm was founded as the world’s first digital payment platform and has been revolutionizing commerce globally for more than 25 years. The fintech company classifies its revenues into two categories, transaction revenues and revenues from other value-added services.
PayPal Holdings, Inc. (NASDAQ:PYPL) has a unique advantage that is difficult to replicate. It stands as one of the only players with both sides of the network, consumer as well as merchant, at scale globally. The firm continues to build more omnichannel capabilities while bringing more value-added services for consumers and merchants to the table. Apart from the distinctiveness and the motivation to drive long-term growth, the firm has strong financial results to offer.
Highlights from the fiscal second quarter include net revenues increasing 8% to $7.9 billion, transaction margin dollars increasing 8% to $3.6 billion, total payment volume increasing 11% to $416.8 billion, and payment transactions increasing 8% to 6.6 billion. The firm recorded its best transaction margin dollar growth since 2021. As of year-end 2023, PayPal has 426 million active consumer and merchant accounts, $1.53 trillion total payment volume, and 25 billion payment transactions. Hence, PayPal is positioned well for long-term durable, and profitable growth.
In the words of former CEO Bill Harris, Paypal is a rather mature and strong company built on the strength of its market position, financials, and balance sheet. Based on these strengths across PayPal, the company has also raised its guidance for growth in transaction margin dollars and earnings per share. The firm operates in a $6 trillion-plus global e-commerce market that benefits from the current digitization of payments and is hence, poised to grow. As of Q2 2024, PayPal Holdings, Inc. (NASDAQ:PYPL) was held by 87 hedge funds thereby ranking on our list. Citadel Investment Group was the top shareholder with a stake worth $469 million.
2. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 142
Mastercard Incorporated (NYSE:MA) is a global payment technology solutions company that serves consumers, small and medium businesses, government and public sector, large enterprises, banks, and credit unions. The firm has pioneered technology to enable safer payments for more than 50 years. Mastercard’s purpose revolves around powering an inclusive digital economy that tends to benefit all. Currently, it connects individuals, businesses, and organizations in more than 210 countries and territories.
Mastercard serves as a payments industry leader which has material results to offer. Over the preceding 5 years, the firm’s revenue grew by 10.94% while its net income expanded by 12.81%. With double-digit net revenue and earnings growth, the firm successfully closed another quarter. Driven by the growth in the payment network and value-added services and solutions, net revenue went up by 11%. The cross-border volume growth of 17% year-over-year and healthy consumer spending supported the company’s results across all business aspects.
Mastercard Incorporated (NYSE:MA) continues to position itself for long-term growth by differentiating its products and solutions and diversifying its revenue streams. Back in April, the firm announced an organizational structure realignment centered on three interdependent areas including Core Payments, Commercial and New Payment Flows, and Services. While Core Payments work as the company’s foundation, Mastercard finds a scalable opportunity in payment and data flows beyond consumer card payments. Simultaneously, offerings from Mastercard’s current Cyber & Intelligence, Data & Services, and Open Banking teams remain integrated under Services.
The strong business fundamentals, a diversified business model with healthy consumer spending, established demand for value-added services, and the persistent shift to digital forms of payment place make Mastercard an unrivaled fintech company. As of Q2 2024, Mastercard Incorporated (NYSE:MA) is held by 142 hedge funds. Akre Capital Management was the top shareholder with a stake worth $1.7 billion.
1. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 163
Visa Inc. (NYSE:V) facilitates transactions between merchants, consumers, government entities, and financial institutions across more than 200 markets. The company’s journey started in 1958 when the Bank of America introduced the first consumer credit card program in the United States. It was in 2007 that Visa formed a global corporation and eventually went public in 2008 in one of the largest IPOs. The firm connects the world through a secure and convenient payments network.
As a leader in digital payments, Visa Inc. (NYSE:V) powers the global economy. The company connects 4 billion account holders to more than 130 million merchants, 14,500 financial institutions, and governments across its markets. Among its peers operating in the broader transaction and payment processing services, Visa has a significant market capitalization of $521.86 billion.
With net revenue growth of 10% and GAAP EPS growth of 20%, Visa closed a strong fiscal third quarter of the year. The key business drivers during the quarter include payments volume up 7%, processed transactions up 10%, and cross-border volume up 14%, on a year-over-year basis. The cross-border volume drives the company’s international transaction revenue. Simultaneously, service revenue was $4 billion, an increase of 8% since the same period in 2023. Data processing revenue climbed 9% year-over-year to $4.5 billion while international transaction revenue grew 9% year-over-year to $3.2 billion. Other revenue rose 31% over the past year.
In conclusion, the firm has a lot to offer through its globally spread reach, brand value, financial strength, and its leading market position. As of Q2, Visa Inc. (NYSE:V) is held by 163 hedge funds. TCI Fund Management was the largest shareholder in the company with a stake worth $4 billion.
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