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 Mastercard Incorporated (NYSE:MA) 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 woman using a payment terminal at the checkout of a store showing payment products and solutions.
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.
Overall MA ranks 2nd on our list of the best fintech stocks to buy. While we acknowledge the potential of MA 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 MA 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.