3 Best Fintech Stocks to Buy in November

The market has not been fun for investors in 2022. Many stocks have taken a hit, and all the major indexes, from S&P 500 to Nasdaq Compositeexperiencing bear markets.

Bear markets can be difficult, but historically have provided great buying opportunities for long-term investors. In times like this, you want to continue to use your money to work in quality companies with good long-term prospects.

Three fintech stocks that look attractive as we enter November are Interactive brokers (IBKR -0.04%), Live Oak Bancshares (LOB 9.89%)and Tradeweb Markets (TW 2.83%). Let’s take a look at why these top three fintech stocks could be great buys this November.

1. Interactive brokers: A preferred trading platform for hedge funds

Interactive Brokers offers electronic brokerage services to tech-savvy investors who want to trade various financial instruments. The company spent decades building and improving its trading platform, catering to the most demanding investors.

In recent years, hedge funds have flocked to Interactive Brokers to take advantage of their electronic trading platform and better execution rates. The broker is attracting other investors as well, and in the third quarter its total client accounts increased 31% from last year.

Although trading volume decreased, the size of trades increased for the broker and it was able to increase commissions by 3% in the quarter. Apart from commissions, Interactive Brokers makes money on margin loans to its clients. The company was a major beneficiary of higher interest rates in the quarter. In the third quarter, the company’s net interest income rose by 73% and was the main driver behind the impressive 70% revenue growth.

Interactive Brokers held up well this year despite market volatility. The company capitalizes on this volatility and attracts more customers to its trading platform, which is why it’s a solid fintech you can add today.

2. Live Oak Bancshares: A bank with the ability to invest in high-quality fintech

Live Oak Bancshares is a regional bank that specializes in serving small businesses. This year was the fifth year in a row. Live Oak Bank was the No. 1 lender through the SBA’s 7(a) lending program.

Live Oak brings years of experience to small business lending, but also has a technological advantage – it runs its core banking business through Finxact’s banking-as-a-service (BaaS) to roll out digital products faster.

The technology the platform uses was a big reason the bank was able to process $2.3 billion in loans through the Paycheck Protection Program (PPP), the loan program introduced during the pandemic to help small businesses keep employees on the payroll.

Live Oak is also an investor in the fintech companies it uses. For example, the bank earned 120 million dollars earlier this year then Fiserv bought out Finxact. It also made another $28 million in the third quarter when it sold its stake in Payrailz to Jack Henry & Associates.

LOB PE ratio data by YCharts

Live Oak shares have fallen nearly 70% from their peak last November, and the stock trades at a price-to-earnings (P/E) ratio of 7.14 – making it close to its cheapest valuation since it went public in 2015.

Live Oak is a quality bank that did an excellent job of serving small businesses and has an ability to make smart fintech investments through its subsidiaries, Live Oak Ventures and Canapi Advisors, making it an excellent buy at today’s valuation.

3. Tradeweb Markets: A trading platform that gains market share

Tradeweb rolled out its digital trading platform in 1996, computerizing trading in US financial markets. The company mainly serves institutional investors, including hedge funds, central banks, market makers and pension funds.

What makes Tradeweb stand out is its commitment to delivering the best customer experience possible through its trading platform while reducing the customer’s trading costs. More customers turn to their platform for this reason.

As of 2016, Tradeweb’s share of the US financial market was 7.5%. This year, the market share is 19.6% – almost a threefold increase. This type of growth is consistent across the many assets, including corporate bonds, stocks and money markets.

Image source: Tradeweb Markets.

In the third quarter, Tradeweb saw its revenue grow 8% from last year, while its average daily volume (ADV) was up 14%. ADV was up across all its assets, with credit markets showing the most significant increase of 32%.

The fintech has been expensive to own, and earlier this year the P/E ratio was around 90. With the share price down 47% from its 52-week high, it still trades at a relatively high P/E ratio of 44.8. The one-year P/E ratio is cheaper at 26, reflecting strong expected growth – making this another solid fintech you can start building a position in today.