Fintech Revolution: The 3 Best Mobile Banking Stocks to Buy
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Financial technology companies, or fintech, are companies that use technology for banking and finance. Think mobile banking shares, payment apps and digital money transfers.
Nearly half of Americans said they had used a mobile wallet in the past three months, according to a recent survey by JD Power. As consumers migrate more and more of their lives online, the fintech revolution rages on. Even traditional banks that have networks of retail branches are moving more of their services into the digital realm, allowing customers to bank, manage and apply for loans and make payments with their smartphone or with the click of a mouse.
Fintech stocks have struggled over the past two years, taking a beating in the last bear market. The names below represent the top three mobile banking companies that can deliver big gains in 2023.
| SQ | Block | $59.25 |
| GPN | Global payments | $104.78 |
| SOPHIE | SoFi technologies | $5.16 |
Block (SQ)
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Fintech company Block (SNEEZE:SQ), formerly known as Square, has been battered and bruised, losing three-quarters of its value over the past two years. In addition to investors fleeing fintech stocks in 2022 and the massive sell-off in cryptocurrencies (of which Block owns a lot), the company was hit by a negative report from Hindenburg Research. The notorious short-seller accused Block of having a “‘Wild West’ approach to compliance” and facilitating “criminal activity and fraud” on the platform. Block denied the allegations, but the report sent SQ shares down 15% in a single trading day.
Down 38% over the past 12 months, SQ is up approx. 15% from the 52-week low, from early November. Investors may want to consider taking a position here, as there are reasons to be cautiously optimistic about Block and its role in the fintech space.
The company’s Cash App mobile payment service remains extremely popular, especially among small business owners and the self-employed. The company is also pushing further into crypto with a new Bitcoin (BTC-USD) mining strategy that comes as the price of BTC skyrockets this year.
Global Payments (GPN)
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Global payments (SNEEZE:GPN) is a fintech company that has been around in one form or another since 1967 and provides payment technology and services to both merchants and consumers. While shares are down 48% over the past two years, they are up 14% since hitting a 52-week low in late 2022.
Recently, GPN stock received an upgrade from analysts at investment bank Goldman Sachs, who raised their rating on the fintech company to “buy” and gave the shares a price target of $127. This means an upside of 21% from today’s level.
On May 1, the company posted first-quarter results and announced a quarterly dividend of 25 cents per share, giving shares a 1% yield. In a surprise move, Global Payments’ longtime CEO also said (CEO) Jeff Sloan is stepping down after nearly a decade at the helm. He will be replaced on June 1 by the current Chief Operating Officer (COO) Cameron Bready.
While the stock sold off nearly 9% on the news, it has regained some ground. Of the 35 analysts covering GPN, 29 rate it “overweight” or “buy.” Their median price target of $135 is 29% above where shares are currently trading.
SoFi Technologies (SOFI)
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SoFi technologies (NASDAQ:SOPHIE), which specializes in banking transactions and arranging student and car loans through its mobile app, has seen its share price collapse by 69% over the past two years. A big part of the problem has been the moratorium on student loan repayments during the pandemic, followed by the student loan forgiveness program pursued by the Biden administration.
Another problem has been the fact that SoFi Technologies remains unprofitable. The company just reported earnings that beat Wall Street expectations on both the top and bottom lines. Still, the stock fell as investors apparently took issue with forward guidance from the company.
Despite the problems, there are signs that the worst may now be over for the SOFI share. Student loan payments will likely resume by the end of August, and management expects to reach profitability by the end of 2023. Shares are up 12% year-to-date despite the post-earnings selloff.
At the date of publication, Joel Baglole 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 InvestorPlace.com Guidelines for publication.
