We recently published a list of 10 Best Cash App Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Fiserv, Inc. (NYSE:FI) stands against other best cash app stocks to buy according to hedge funds.
The mobile payment service Cash App has grown significantly throughout the years, and in 2022 it was valued at $138 billion, up from $40 billion in 2020. Although its earnings increased to $2.95 billion, showing consistent yearly growth since 2018, its revenue decreased to $10.6 billion in 2022 from $12.3 billion in 2021, despite this remarkable valuation. Cash App’s user base grew by 7 million from 2021 to 51 million in 2022, due to its user-friendly interface and array of financial services, which include peer-to-peer payments, Bitcoin investments, and cash card features. The four U.S. states of Texas, California, Florida, and New York together account for 48.75% of Cash App’s user base, with over half of its customers concentrated in these states. As of 2020, there were just 10,000 active Android users in the United Kingdom, and its market share was less than 0.05%. In 2022, the platform handled more than 528 million transactions, demonstrating its increasing use. Cash App is positioned as a major participant in the digital payment ecosystem, particularly in the U.S. market, due to its excellent features and rising profitability.
As per findings by Apptopia, Cash App was the most downloaded payment app between April and May 2020, with a 20.1% increase in U.S. downloads, reaching around 4 million within that time frame. Additionally, usage increased, with roughly 250 million sessions in April—the second-highest number among payment applications. As people looked for alternatives to in-person banking and provided financial support to friends and family, the pandemic caused a shift toward digital transactions, which is what is responsible for this surge.
According to Block, Cash App’s parent company, in a manner that many financial institutions have not been able to, Cash App has expanded access to the financial system and enabled a wide range of consumers to send, spend, save, invest, and comprehend their money more effectively. Its goal is to “redefine the world’s relationship with money by making it more relatable, instantly available, and universally accessible,” which is in line with this. Block believes Cash App can keep improving the economy both today and in the future.
However, Cash App has also faced challenges. Recently, under Jack Dorsey’s leadership, Block agreed to a $175 million settlement with the CFPB, which included a $55 million fine and up to $120 million in reimbursements for Cash App users. Allegations of widespread fraud and insufficient customer service on the platform were addressed in the settlement. The CFPB charged Cash App with facilitating fraud, sending users to banks, and neglecting to look into questionable transactions. Cash App accounted for over half of Block’s 2023 gross profit, with over 56 million accounts. In addition, after 48 state regulators joined together, Block paid an $80 million fine for money laundering violations.
The press release stated:
“While we strongly disagree with the CFPB’s mischaracterizations, we made the decision to settle this matter in the interest of putting it behind us and focusing on what’s best for our customers and our business,”
Methodology
For this article, we reviewed multiple reliable websites and videos that discuss stocks available on Cash App. From there, we formed an initial list of the 20 Best Cash App Stocks To Buy According to Hedge Funds. From the resultant dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 900 hedge funds in Q3 2024 to gauge hedge fund sentiment for stocks.
Why are we interested in 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)
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Fiserv Inc. (NYSE:FI)
Number of Hedge Fund Holders: 71
One of the Best Cash App Stocks, Fiserv, Inc. (NYSE:FI) is a top supplier of core processing and ancillary services for US banks and credit unions, concentrating on small and midsize banks. These services include electronic funds transfers, payment processing, and loan processing. In 2019, the firm merged with First Data to offer retailers payment processing services as well. The company’s overseas revenue accounts for around 10% of its total revenue.
Fiserv, Inc. (NYSE:FI)’s adjusted profits per share rose 17% to $2.30, indicating solid revenue and earnings growth. The adjusted operating margin increased by 170 basis points to 40.2%, supported by a 15% increase in organic revenue, while adjusted revenue increased by 7%.
Clover, the company’s credit card processing business, achieved a 28% growth in sales, while value-added services reached a penetration rate of 21%. These factors contributed to a 24% organic revenue growth in the Merchant Solutions segment. The business revealed significant partnerships and projects, such as agreements with Walmart for real-time Pay by Bank transactions and DoorDash for embedded finance solutions. Along with the growth of Clover pilots in Brazil and Mexico, new features were introduced, including the enterprise commerce control center.
Organic revenue in the Financial Solutions category increased by 6%, driven by important wins such as Exxon signing on for a Data-as-a-Service offering and PNC implementing an AI-enabled fraud detection product.
Fiserv, Inc. (NYSE:FI) increased its 2024 estimate, showing confidence in its sustained good performance. It increased the expectations for organic revenue growth from 15%-17% to 16%-17% and adjusted EPS guidance to $8.73-$8.80.
Delaware Ivy Core Equity Fund stated the following regarding Fiserv, Inc. (NYSE:FI) in its Q3 2024 investor letter:
“Fiserv, Inc. (NYSE:FI) – Solid revenue and profitability trends drove price appreciation during the quarter. The payments-processing and bank technology company remains a reasonably valued alternative to capitalize on digital conversion of payments and technology migration in the banking industry.”
Overall, FI ranks 6th on our list of best cash app stocks to buy according to hedge funds. While we acknowledge the potential for FI to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FI 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.
