We recently compiled a list of the 13 Most Promising Fintech Stocks to Buy. In this article, we are going to take a look at where Fidelity National Information Services, Inc. (NYSE:FIS) stands against the other promising fintech stocks.
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.
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).
A financial analyst monitoring the stock market, with multiple screens of varying sizes and colors.
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%.
Overall FIS ranks 11th on our list of the most promising fintech stocks to buy. While we acknowledge the potential of FIS 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 FIS 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.
