In this article, we will take a look at the 13 most promising fintech stocks to buy in detail.
Global Fintech at a Glance
According to a report by Expert Market Research, the global fintech market was valued at $226.71 billion in 2023 and is expected to grow to $917.17 billion by 2032, at a compound annual growth rate of 16.8% between 2024 and 2032. CNBC has unveiled a comprehensive distribution of the fintech industry by category. Payments make up 20%, alternative finance 16%, neo banking 14%, wealth technology 12%, business process solutions 10%, financial planning 8%, banking solutions 10%, and digital assets 6%, of the industry.
The fintech market has witnessed a surge in growth over the last decade and continues to show resilience and strength. In research conducted by the World Economic Forum, 51% of fintech companies cited strong consumer demand for their services to be the main driver of growth. This trend remained consistent across all regions. Digital innovation by such fintech companies operating in developing economies has simply helped people escape the traditional banking system.
While the booming fintech sector is meant to offer the best of both worlds which means innovative banking and cutting-edge technology alongside safety, customers have recently encountered problems with safety and security. An estimated 100,000 Americans who were customers of fintech apps were locked out of their banking accounts in early May. This was after the bank-fintech middleman Synapse Financial Technologies filed for bankruptcy in April which led to the freezing of accounts for customers of its partner banks. Although the fintech apps in this scenario were relatively smaller as compared to dominant players, Hugh Son questioned the safety of the fintech model where fintechs partner with banks which is also followed by Chime and PayPal, in a talk with CNBC.
Regarding this, there has been a positive development for those using fintech apps whose funds can get stuck in case of a mishap. Recently, the U.S. banking regulator, Federal Deposit Insurance Corp, proposed strengthened rules for banks working with fintech companies. Under these rules, such banks would have to identify the beneficial owners of each account and its balance. Hence, the proposal would ensure that third parties like Synapse would be allowed to maintain the records as long as the bank retains unrestricted access to that data even in the event of a middleman’s bankruptcy.
With that being said, let’s move to the 13 most promising fintech stocks to buy.
Our Methodology:
In order to compile a list of the 13 most promising fintech stocks to buy, we first sifted through ETFs and online rankings to gather a preliminary list of 30 such stocks. We then selected the top 13 stocks that had the highest upside potential. The 13 most promising fintech stocks to buy are arranged in ascending order of their average upside potential, as of September 30. We have also supplemented our ranking with the number of hedge funds held by every stock, 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).
13 Most Promising Fintech Stocks to Buy
13. PayPal Holdings, Inc. (NASDAQ:PYPL)
Average Upside Potential: 2.72%
Number of Hedge Funds: 87
PayPal Holdings, Inc. (NASDAQ:PYPL) enables digital payments on behalf of merchants and consumers. The company enables consumers and businesses in 200 markets to join the global economy. It was founded as the world’s first digital payment platform and has been revolutionizing commerce globally for more than 25 years. PayPal classifies its revenues into two categories, transaction revenues and revenues from other value-added services.
PayPal Holdings, Inc. (NASDAQ:PYPL) serves as one of the only players with both sides of the network, consumer as well as merchant, at scale globally. This gives the firm a distinct competitive edge. The firm ended 2023 with 426 million active consumer and merchant accounts and $29.8 billion in revenue. It also processed 25 billion payment transactions and $1.53 trillion in total payment volume across its platform in the year. Therefore, PayPal is established enough and well-positioned for long-term and profitable growth.
PayPal closed a good first half of 2024 with the management believing that the firm is on the right path. Net revenues increased 8% to $7.9 billion, transaction margin dollars increased 8% to $3.6 billion, total payment volume rose 11% to $416.8 billion, and payment transactions rose 8% to 6.6 billion. The firm recorded its best transaction margin dollar growth since 2021.
While PayPal has been the go-to solution for online purchases, it recently moved into a new era for customers. With new rich rewards and in-store access transforming PayPal into a single solution for every kind of customer everywhere they shop, this is a pivotal moment for the company. The firm has enabled even more ways to pay since customers can now add their PayPal Debit Card to Apple Wallet in a few steps and use it with Apple Pay.
Considering the fact that PayPal operates in a $6 trillion-plus global e-commerce market that benefits from the digitization of payments, the firm has a bright future. As of Q2, the stock is held by 87 hedge funds.
12. Fiserv, Inc. (NYSE:FI)
Average Upside Potential: 3.43%
Number of Hedge Funds: 73
Fiserv, Inc. (NYSE:FI) is a global fintech and payments company with solutions for banking, global commerce, merchant acquiring, billing and payments, and point of sale. Fiserv enables money movement for many financial institutions, people, and businesses. It aspires to move money and information in a way that moves the world.
Fiserv, Inc. (NYSE:FI) has more than 40 years of fintech and payments leadership, with over 6 million merchant locations globally and over 25,000 financial transactions per second at peak. Through its integrated solutions, strong client franchise, and strategic positioning, the industry leadership position remains strong. The firm has grown to become a Fortune 500 company and one of the. largest global provider of technology solutions to the financial services industry.
The fiscal second quarter reflected a strong performance across Fiserv’s business. With 6% growth in the Financial Solutions segment and 9% growth in the Merchant Solutions segment, the fintech recorded a 7% year-over-year increase in its adjusted revenue. Adjusted earnings per share increased 18% both in the quarter and year to date.
Fiserv has been shaping the financial services landscape for four decades and has delivered business success to many financial institution clients. The company has a leading industry position complemented by its broad reach and scale. It is held by 73 hedge funds, as of Q2 2024. Hence, Fiserv, Inc. (NYSE:FI) is one of the promising fintech stocks to buy.
11. Fidelity National Information Services, Inc. (NYSE:FIS)
Average Upside Potential: 5.86%
Number of Hedge Funds: 59
Fidelity National Information Services, Inc. (NYSE:FIS) is a leading provider of financial technology solutions for businesses, financial institutions, and developers. The company improves the digital transformation of the financial economy by advancing the way the world pays, banks, and invests. FIS is a member of the Fortune 500 and is headquartered in Jacksonville, Florida.
FIS is a scaled technology leader that delivers a broad suite of best-of-breed solutions. The world runs on FIS as the firm works with 95% of the world’s leading banks. The fintech firm has a history of growth worth mentioning. It was founded in 1968 as Systematics, acquired by ALLTEL Information Services later, and then bought by title insurance giant Fidelity National Financial who renamed it Fidelity Information Services. Over the years, FIS acquired several financial technology firms to expand its reach and emerge as the largest technology provider to the global financial industry which currently offers more than 500 solutions and processes over $75 billion of transactions globally.
Fidelity National Information Services, Inc. (NYSE:FIS) continued a positive momentum through Q2 with sixth straight quarter of outperformance. On an adjusted basis, revenue rose 4% as compared to the prior-year period and was driven by 4% adjusted recurring revenue growth. Due to cost-saving initiatives and a higher-margin revenue mix, adjusted EBITDA margin expanded by 110 basis points relative to the preceding year.
FIS is one of the world’s leading technology providers to the capital markets, retail banking, and merchant industries. With recent financial results demonstrating accelerating revenue with expanding margins, the business strength is evident. As of September 30, the average upside potential for Fidelity National Information Services, Inc. (NYSE:FIS) is 5.86%.
10. Shift4 Payments, Inc. (NYSE:FOUR)
Average Upside Potential: 6.43%
Number of Hedge Funds: 33
Shift4 Payments, Inc. (NYSE:FOUR) is a fintech firm that offers payment processing solutions. The company’s payment network is a highly secure and reliable platform with point-to-point encryption which processes payments for lots of merchants across various business types. Hence, Shift4 continues to redefine commerce by simplifying complex payments ecosystems globally.
The company is a global leader in financial technology with over 25 years in business, over 200,000 customers, and more than $260 billion processed annually. The firm has driven momentum across multiple verticals. With restaurants, the firm continues to gain market share by winning new restaurants every day. In hospitality, the firm has expanded its market share and now processes payments in Canadian and European markets. It also powers payments in sports and entertainment. Other new verticals include retail, gaming, and non-profits. The strength of this diversification makes FOUR resilient against economic uncertainty.
The firm recently closed another busy quarter with results largely in line with its expectations. During the second quarter, end-to-end payment volume rose 50% year-over-year. The firm recorded gross revenue of $827.0 million, up 30% as compared to the prior-year period. Net income for Q2 was reported to be $54.5 million. The firm also witnessed a 48% year-over-year rise in adjusted EBITDA.
A leading position in commerce-enabling technology and a robust performance across diversified verticals deems Shift4 Payments, Inc. (NYSE:FOUR) a promising fintech stock. As of Q2, the stock is held by 33 hedge funds.
9. Mastercard Incorporated (NYSE:MA)
Average Upside Potential: 7.37%
Number of Hedge Funds: 142
Mastercard Incorporated (NYSE:MA) is a global payment technology solutions company. The firm connects consumers, merchants, government, digital partners, and businesses worldwide by enabling electronic payments. Mastercard’s purpose revolves around powering an inclusive digital economy that tends to benefit everyone, everywhere.
Mastercard Incorporated (NYSE:MA) serves as a payments industry leader which is currently demonstrating broad-based momentum across all aspects of its business. It makes payments easier and more efficient by providing payment solutions and services using its well-known brands including Mastercard, Maestro, and Cirrus. The firm has been making payments smarter and safer for more than 50 years. It continues to drive growth by winning and retaining deals, expanding in new geographies, and further digitizing the payments ecosystem.
In an attempt to position itself for further and more sustainable growth, the firm announced an organizational structure realignment centered on three interdependent areas of Core Payments, Commercial and New Payment Flows, and Services. While Core Payments works 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.
Recently, Mastercard closed another strong quarter across all aspects of its business. During Q2, net revenue increased by 11% which is attributable to growth in the payment network and value-added services and solutions. While payment network net revenue increased by 7%, value-added services, and solutions net revenue increased by 18%. The continued healthy consumer spending and robust cross-border volume growth of 17% supported the strong performance.
The company remains positive about its growth outlook. The diversified business model and focused strategy position sets the company well to capture the opportunities ahead. In conclusion, Mastercard Incorporated (NYSE:MA) is a recognized market leader with material progress to offer. As of Q2 2024, the stock is held by 142 hedge funds.
8. Nu Holdings Ltd. (NYSE:NU)
Average Upside Potential: 8.17%
Number of Hedge Funds: 59
Nu Holdings Ltd. (NYSE:NU) is a Brazilian fintech company that serves more than 105 million customers across Brazil, Mexico, and Colombia. The firm serves as one of the world’s largest digital financial services platforms. It caters to the customer’s whole financial journey and promotes financial access.
Nu benefits from a strong regional footprint by 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. Based on the number of customers, Nu serves as the fourth-largest financial institution in Latin America. Back in May, the fintech company surpassed 100 million customers and was the first digital banking platform to cross the milestone outside Asia.
For the fiscal second quarter, 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 increased 65% year-over-year to a record high of $2.8 billion.
With the position of one of the best-capitalized players in the region, top-line growth, and a robust growth trajectory, Nu Holdings Ltd. (NYSE:NU) ranks among the 13 most promising fintech stocks to buy. As of Q2, the stock is held by 59 hedge funds.
7. Payoneer Global Inc. (NASDAQ:PAYO)
Average Upside Potential: 8.41%
Number of Hedge Funds: 35
Payoneer Global Inc. (NASDAQ:PAYO) is a leading global payments platform that partners with freelancers, SMBs, marketplaces, and enterprises to solve their payment challenges. The firm began with the vision of democratizing access to global commerce for all kinds of businesses and has made global commerce easy and secure.
Pioneer is trusted by millions of customers and leading marketplaces such as Upwork, Amazon, Adobe, and Google. The firm’s CEO John Caplan is trying to refocus the cross-border payments firm for small and mid-sized companies on the business-to-business market which offers a bigger opportunity. Payoneer Global Inc. (NASDAQ:PAYO) accelerated its B2B momentum through the recent acquisition of the Singapore-based global HR and payroll startup, Skuad. This acquisition combines the reach of Payoneer with the comprehensive global workforce and payroll solutions from Skuad.
Q2 marked Payoneer’s another consecutive quarter of record revenue, growing volume, and ICP (Ideal Customer Profiles) growth. The quarter recorded a 40% year-over-year rise in B2B volume, a 15% year-over-year increase in marketplace volume, a 192% year-over-year rise in merchant services (Checkout) volume, and a 31% year-over-year rise in enterprise payouts volume.
The leading position as the partner of choice for SMBs with global operations and an increasing focus on the $6 trillion cross-border, B2B payments has placed Payoneer Global Inc. (NASDAQ:PAYO) in an attractive spot. The stock has an average upside potential of 8.41% and ranks among the 13 most promising fintech stocks to buy.
6. MercadoLibre, Inc. (NASDAQ:MELI)
Average Upside Potential: 8.97%
Number of Hedge Funds: 84
MercadoLibre, Inc. (NASDAQ:MELI) is a leading fintech and e-commerce company in Latin America. The company has been democratizing commerce and financial services for 25 years. It has a presence in 18 countries including Argentina, Brazil, Mexico, Colombia, Chile, Colombia, and Peru.
MercadoLibre, Inc. (NASDAQ:MELI) has emerged to be one of the leading fintechs in the region with its ecosystem as its competitive advantage. With financial services ripe for disruption in the firm’s markets, it successfully operates a fintech business that matches the lowest cost-to-serve in the region. Mercado has positioned itself well for market share gains across the region’s fintech landscape. Other than fintech, it operates as an e-commerce market leader in Latin America. Overall, the firm has a diversified mix of revenue with ample room for growth.
The firm delivered a good fiscal second quarter. The revenue increased by 42% year-over-year with a 20% increase in gross merchandise volume and a 36% increase in total payment volume. Net income climbed 103% as compared to the prior year period. The strength of MercadoLibre, Inc. (NASDAQ:MELI) across its geographies is evident from revenue growth of 51% year-over-year in Brazil, 66% year-over-year in Mexico, and 36% year-over-year increase in its Others segment. The Commerce and Fintech revenue streams continue to grow, with 53% and 28% increases since 2023 respectively.
A large scale, a diversified mix of revenue, and low-cost structures with solid and sustainable profitability deem MercadoLibre, Inc. (NASDAQ:MELI) an attractive fintech stock. As of September 30, the stock has an average upside potential of 8.97%.
5. Visa Inc. (NYSE:V)
Average Upside Potential: 15.20%
Number of Hedge Funds: 163
Visa Inc. (NYSE:V) is a global payments technology company that 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 is headquartered in the San Francisco Bay Area.
Visa powers the global economy by connecting 4 billion account holders to more than 130 million merchants, 14,500 financial institutions, and governments across its markets. Other than being a known leader in digital payments, the firm builds its portfolio of value-added services for its clients and partners which offer it an opportunity to diversify its revenue. The firm has accomplished making one of the most reliable and secure payment networks in the world. The firm’s scale and reach are evident from the fact that the Visa network enabled $15 trillion in total volume and 276 billion transactions in fiscal year 2023.
Visa Inc. (NYSE:V) delivered strong results in the fiscal third quarter with net revenue growth of 10% and GAAP EPS growth of 20%. With payments volume up 7%, processed transactions up 10%, and cross-border volume up 14%, on a year-over-year basis, the performance was strong. The firm witnessed strong payments volume growth rates in most major regions including Latin America, CEMEA, and Europe ex U.K.
With a strong purpose of being the best way to pay and be paid, Visa Inc. (NYSE:V) benefits from a leading market position, strong brand recognition, and financial strength. As of September 30, the stock’s average upside potential is 15.20%.
4. Intuit Inc. (NASDAQ:INTU)
Average Upside Potential: 19.54%
Number of Hedge Funds: 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 serves 100 million customers globally with products including TurboTax, Credit Karma, QuickBooks, and Mailchimp. While TurboTax does taxes from start to finish, Credit Karma works as an AI-powered platform helping more than 130 million members in the US manage their financial lives. QuickBooks helps businesses with invoicing, expenses, inventory, and bank feeds. Mailchimp is an email marketing and automations platform.
Intuit serves as a global AI-driven expert platform powering prosperity for consumers, and small and mid-market businesses. The firm sees good momentum for itself as it connects its customers with AI-powered expertise. With an established network of AI-powered virtual experts, the large scale of its data, and investments in AI capabilities, the firm is poised for durable growth in the time to come.
For fiscal year 2025, the company expects 16 to 17% growth in the Global Business Solutions Group, 7 to 8% growth in the Consumer Group, 3 to 4% growth in ProTax Group, and 5 to 8% growth in Credit Karma. The firm’s strong results for the fourth quarter and full year were a testament to its progress. It increased combined platform revenue by 14% to $12.5 billion, which includes the Small Business and Self-Employed Group Online Ecosystem, TurboTax Online, and Credit Karma, for fiscal 2024.
For the full year, total revenue was also 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%. The brand strength, solid segment performance, and an average upside potential of 19.54% make Intuit a promising fintech stock. As of Q2, the stock is held by 82 hedge funds.
3. Global Payments Inc. (NYSE:GPN)
Average Upside Potential: 30.67%
Number of Hedge Funds: 66
Global Payments Inc. (NYSE:GPN) is an American financial technology company that offers payment technology and software solutions to its customers. The company enables simple, fast, and secure payments. It is headquartered in Georgia and has 27,000 team members globally. It has a worldwide presence spanning North America, Europe, Asia Pacific, and Latin America.
The firm has a global commerce system comprising 4.6 million merchant accounts, 4,000 tech partners, 1500 financial institutions, and over 100 industries. The company claims to lead the industry in innovation, scale, and service. It has a powerful ecosystem of brands that span different verticals and offer unrivaled solutions. Some of these include globalpayments, Heartland, greatergiving, AdvancedMD, ECSI, and touchnet, Hence, Global Payments is diversified enough in terms of geography, vertical markets, and revenue streams.
Global Payments Inc. (NYSE:GPN) closed its second quarter with high single-digit adjusted net revenue growth and double-digit adjusted earnings per share growth. Adjusted net revenues increased 6% to $2.32 billion while adjusted earnings per share increased 12% to $2.93. The firm is well positioned to capitalize on its growth opportunities by currently streamlining and simplifying business through its operational transformation.
As the firm aspires to become the global partner of choice for commerce solutions, it has recently outlined its strategic focus. In Merchant Solutions, the firm has decided to fully unify its business worldwide by harmonizing products and capabilities under a common brand, Genius, and using vast distribution channels to extend them worldwide. In Issuer Solutions, the firm is benefitting from opportunities for growth through its cloud modernization and cross-selling initiatives.
As of Q2, the company is held by 66 hedge funds. Analysts hold a consensus Buy rating on the stock and their 1-year median price target points to a 30.67% upside from the current stock price.
2. Block, Inc. (NYSE:SQ)
Average Upside Potential: 34.39%
Number of Hedge Funds: 59
Block, Inc. (NYSE:SQ) helps expand access to the economy through Square, Cash App, Spiral, TIDAL, and TBD. 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 key businesses of Block, Inc. (NYSE:SQ) have proven to be robust. In the overall Square gross profit, the gross profit from international markets continues to grow which shows an expanding business. The CashApp ecosystem has successfully driven growth across diverse services and revenue streams while total inflows have increased 22% year-over-year. Additionally, the market opportunity for the firm remains vast. While Square represents a nearly $130 billion gross profit opportunity, Cash App represents a nearly $75 billion gross profit opportunity in the US.
The firm recorded a strong second quarter with its gross profit increasing 20% since the prior-year period. Square gross profit increased 15% year-over-year while Cash App’s gross profit climbed 23% year-over-year. Adjusted operating income was up 16 folds year-over-year. For the 12 months ending in June 2024, Block had $1.43 billion in adjusted free cash flow, almost doubling from the preceding year.
With growth at scale and successful key businesses alongside strong financial results, Block, Inc. (NYSE:SQ) has a lot of future potential. As of Q2, the stock is held by 59 hedge funds. The average upside potential for the stock stands at 34.39%.
1. StoneCo Ltd. (NASDAQ:STNE)
Average Upside Potential: 63.73%
Number of Hedge Funds: 35
StoneCo Ltd. (NASDAQ:STNE) serves as a provider of financial technology solutions to help merchants and integrated partners conduct e-commerce seamlessly. The company caters to clients that transact online, offline, or with an omnichannel sales approach. The firm has the mission of becoming the best financial operating system for Brazilian merchants.
The company defines its focus on empowering clients to grow their businesses as a key differentiator that enables client retention. It serves with its financial and software solutions with the best service in the industry. Some of the top competitive advantages include superior client service, a comprehensive merchant platform, and tech-enabled distribution. The fintech has demonstrated strong revenue growth, accelerating profitability, and improving earnings over the past 3 years.
The strength across the whole business was evident in the Q2 results. In payments, MSMB Card Total Payment Volume increased by 17.4% year-over-year reflecting market share gains within the segment. In banking, the company reached 2.7 million active banking clients and 6.5 billion reais in deposits. The profitability of the software business also remains stable on a recurring basis. Simultaneously, the credit portfolio grew and reached R$ 712 million with strong quality in the quarter.
With a business diversified across payments, banking, software, and credit, StoneCo Ltd. (NASDAQ:STNE) has ample opportunities for business growth ahead of it. The stock is held by 35 hedge funds, as of 2024’s second quarter.
While we acknowledge the potential of STNE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than STNE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
