We recently compiled a list of the 10 Best Fintech Stocks To Buy in 2024. In this article, we are going to take a look at where American Express Company (NYSE:AXP) stands against the other fintech stocks.
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.
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).
A close-up view of a payment terminal, capturing the sophistication of a payment network.
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.
Overall AXP ranks 7th on our list of the best fintech stocks to buy. While we acknowledge the potential of AXP 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 AXP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
