3 Cheap Fintech Stocks to Buy Before They Come Back
The fintech sector has gained a bad reputation, mainly due to the reckless decision of some companies to dive headlong into the cryptocurrency bubble. The Street’s general aversion to all things tech during the recent downtrend doesn’t help matters. Still, for long-term investors, there are excellent cheap fintech stocks that haven’t gotten too involved in crypto and are likely to deliver huge returns over the next year or two once they bounce back.
After all, the role of technology in financial services is always expanding, as artificial intelligence and digital payments, among other technologies, become increasingly pervasive in the space. Meanwhile, the Street’s disdain for tech stocks won’t last as macro conditions improve.
Here are three cheap fintech stocks that aren’t heavily involved in crypto and have bright long-term prospects.
| FLT | FleetCor Technologies | $170.47 |
| IMXI | International Money Express, | $25.58 |
| PYPL | PayPal | $83.94 |
FleetCor Technologies (FLT)
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Supplier of digital payment solutions FleetCor Technologies (SNEEZE:FLT) helps businesses make payments and control their business expenses. Shares are down 24% in 2022, which is only slightly worse than The S&P 500s year’s performance. However, FLT shares have lost nearly a quarter of their value since September 12, while the broader market has fallen around 10%.
The only real company-specific news during that time period was FleetCor’s announcement that its CFO was stepping down to work at a software firm. Like all other employees, CFOs leave companies for many different reasons, including personal problems, a desire for new challenges and higher compensation. Given Fleetcor’s strong financial performance and outlook, I wouldn’t read too much into the CFO’s departure.
The company announced solid second-quarter results that beat analyst estimates, reporting earnings of $4.17 per share on revenue of $861 million, which was up 29% from a year ago. For the full year, analysts expect both turnover and earnings to jump more than 20%.
Finally, The Street responded positively to news late last week that the company is buying the European workforce travel company Roomex.
After the recent decline, FLT stock has a very low forward price-to-earnings ratio of 9.5. Meanwhile, Investor’s Business Daily giving it an EPS rating of 93 and an SMR grade of A. SMR stands for sales growth, profit margins and return on equity, and it measures companies’ overall financial strength.
International Money Express (IMXI)
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International Money Express (NASDAQ:IMXI) specializes in enabling money transfers from the US and Canada to parts of Latin America, Africa and Asia. Services include online payments, prepaid debit cards and direct deposit payroll cards.
In the second quarter, the company’s revenue rose 17% year over year to nearly $137 million, while EPS came in at 47 cents versus analysts’ average outlook of 43 cents. Analysts expect revenue growth of 19% this year and 17% next year. Meanwhile, revenues are expected to increase by 29% in 2022 and 20% in 2023. Investor’s Business Daily giving the IMXI share a very high EPS score of 96.
Seeking Alpha BOOX Research recently noted that the company is “gaining market share in its core operating countries in Central America” and theorized that tougher economic times could boost demand for its services.
IMXI is one of the rare fintech stocks that is up for the year, up 60%. Nevertheless, shares have a forward price-to-earnings ratio of just 12.4.
PayPal (PYPL)
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PayPal (NASDAQ:PYPL) has fallen far out of favor with the Street, with shares down 55% so far this year. Although PayPal supports crypto transfers, there is not much investment in crypto. InvestorPlace columnist Bret Kenwell recently wrote that he believes PayPal’s business has bottomed out after management raised its earnings guidance for the current quarter.
Management also raised its full-year EPS guidance after reporting better-than-expected revenue and earnings for the second quarter. Revenue rose 9% year over year to $6.8 billion in Q2, while adjusted earnings of 93 cents per share were ahead of estimates of 87 cents per share.
In an October 12 memo to clients, Bank of America predicted the company’s third-quarter EPS could beat analysts’ average estimate, thanks in part to higher interest rates and efforts to control expenses. The firm remains bullish on PYPL shares.
PYPL’s forward price-earnings ratio of 17.5 is low given the company’s strong growth and high profitability.
As of the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publishing Guidelines.
