7 Best Fintech Stocks to Buy

Fintech has had a tough 2022, but the sector is set to rise next year.

Financial technology, or fintech, stocks have significantly underperformed in 2022. As a group, these stocks lag behind the S&P 500, which is down 14.4% year-to-date through December 2. Compare that to popular fintech exchange-traded fund ARK Fintech Innovation ETF (ticker: ARKF), which fell 59.5% in that period. While fintech investors may be tempted to turn the calendar and move on, Wellington Management analyst Matt Ross notes that the fintech sector is likely to rebound in 2023, offering investors an opportunity to pick fintech stocks on the cheap . Given that scenario, these seven fintech stocks are worth a closer look.

Block Inc. (SQ)

Block’s share price is down a whopping 57.8% in 2022 through December 2, but it rallied in November, rewarding resilient shareholders with a 17.2% return for the month. While the boom had fallen off its laurels for Block, the underlying problems fueling this decline – high inflation, high interest rates and slow supply chains – show every sign of recovery. Meanwhile, the company reported better-than-expected third-quarter results published in early November, highlighted by a 36% year-over-year increase in gross profit and a 17% year-over-year revenue upgrade. In addition, the two ecosystem pillars Cash App and Square generated a 51% and 29% increase in gross profit, respectively. Given the rise in the use of contactless payments and the company’s continued expansion into the UK, Australia, Canada and France, investors should expect a smoother ride with Block in 2023.

PayPal Holdings Inc. (PYPL)

PayPal stock has fallen significantly in 2022, with the digital payments giant down 60.4% through December 2. Part of the problem is increasing competition, especially with Apple Inc.’s ( AAPL ) rise in the financial market, which is growing at a 52% clip worldwide and 59% in the U.S. over the past year. Deutsche Bank analyst Bryan Keane cites Apple’s payments ramp-up as “extremely fast” in a recent research note. PayPal’s growth rate over the same period has stalled at 8% worldwide and 4% in the US, but PayPal still owns 16% of the global payments market compared to Apple’s 5%. As Keane notes, PayPal’s stock has been hung out to dry by investors who have largely avoided tech stocks, a trend that is unlikely to continue as the economy improves and inflation and interest rates moderate. Additionally, PayPal’s Venmo app is on Amazon.com Inc.’s ( AMZN ) shopping platform, which should help drive stock gains as it signals PayPal’s rising position in the lucrative “buy now, pay later” e-commerce space.

Toast Inc. (TOST)

Specializing in cloud solutions for the restaurant sector, Toast has shared some of the restaurant sector’s woes as shutdowns cost eateries billions in 2020 and 2021. That’s a big reason why 2022 has been a hangover year for TOST, with the stock down 48.2% through 2. December. However, the company is starting to turn around, with third quarter year-over-year earnings showing a 55% increase in revenue to $752 million, while adjusted net loss is down to $98 million compared to $254 million last time. year. Toast’s management also upgraded its outlook with a fourth-quarter revenue forecast of between $730 million and $760 million versus a consensus analyst view of $725 million. Analysts have taken notice, with Needham’s Mayank Tandon upgrading the analyst firm’s target price call from $27 to $32. “We continue to be impressed by the strong sales execution amid an uncertain macro backdrop, as management continues to capitalize on the huge market opportunity,” Needham said in a recent research note.

Intuit Inc. (INTU)

Intuit recently published performance figures for the three-month period ended October 31. In the release, the tax software company reported revenue growth of 29% to $2.6 billion, beating analysts’ expectations of $2.5 billion. Earnings per share growth was fantastic, at 14 cents per share, easily beating management’s outlook. That’s good news for shareholders, who saw the share price rise by 3.3% in November. Jeffries has taken notice, maintaining his “buy” call, even as the analyst lowered his share price outlook from $575 to $525. Meanwhile, the consensus analyst call for INTU is a “strong buy” along with an average price target of $477.61 for the stock, which closed at $407.92 on Dec. 2.

Visa Inc. (V)

While Visa’s share price is down 12.3% from all-time highs, the consumer payments giant’s future fortunes look promising for 2023. The company released its fourth-quarter financial report on October 25, announcing a 22-year streak of revenue growth. % to $29.3 billion. That’s what you get with a company that accounted for 39% of all global credit card purchases last year. Visa is extremely shareholder-friendly, using its huge amount of cash — $18 billion in free cash flow — to buy back $11.5 billion in company stock in its most recent fiscal year. The good news means shares are up 14.1% since 25 October. If you buy V shares, you’ll be in good company: High-profile shareholders include Warren Buffett’s Berkshire Hathaway Inc. (BRK.A, BRK.B) and Fisher Investments, which is headed by Ken Fisher.

SoFi Technologies Inc. (SOFI)

SoFi’s stock has followed the industry trend, falling 70.3% in 2022 as of December 2. What the company has going for it is the recent purchase of Golden Pacific Bancorp and its very useful bank charter. SoFi can now call itself a legitimate bank that can issue loans and provide deposit services, which it previously had to outsource to third-party financial institutions. That means regular fat interest payments along with the ability to hold and sell loans to outside investors. MoffettNathanson fintech analyst Eugene Simuni likes what he’s seeing in SoFi these days, especially with its increasingly profitable personal loan business. “The success of the firm’s personal loan franchise has enabled SoFi to consistently beat consensus expectations, despite mixed performance across the rest of the portfolio,” Simuni said in a research note. “In 3Q, however, another part of SoFi’s franchise delivered an even bigger positive surprise.” That surprise came from the company’s digital banking business, which had a 65% quarter-on-quarter revenue increase.

Amazon.com Inc. (AMZN)

You can’t call Amazon a purely fintech company — not when it earns its bread and butter as a cloud services company. However, AMZN is partnering with financial technology companies on a growing basis. One example: Amazon’s partnership with Affirm Holdings Inc. (AFRM) provides a clear path to the increasingly lucrative “buy now, pay later” online payments sector. BNPL is expected to grow from $22.9 billion to $90.5 billion by 2029, according to Fortune Business Insights. Meanwhile, Amazon has also partnered with fintech outfits like Block and Intuit to improve the digital finance user experience. JPMorgan analyst Doug Anmuth is sticking with his “overweight” call on AMZN and setting his target stock price at $145, primarily because of Amazon’s robust growth potential. The stock closed at $94.13 on December 2.

7 fintech stocks to buy for 2023:

Block Inc. (SQ) PayPal Holdings Inc. (PYPL) Toast Inc. (TOST) Intuit Inc. (INTU) Visa Inc. (V) SoFi Technologies Inc. (SOFI) Amazon.com Inc. (AMZN)

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7 Best Fintech Stocks to Buy originally appeared on usnews.com

Update 12/05/22: This story was previously published at an earlier time and has been updated with new information.