Financial technology can help transform an economy and it has emerged as a strong sector in 2023. The industry did face some volatility throughout the year, but with inflation easing, it looks like better days are ahead. Now is the time to look for growth stocks that have the potential to soar as the fintech sector grows. According to a McKinsey report, the revenue in the industry is expected to grow three times faster than in traditional banks between 2023 and 2028. This highlights the growing consumer preference towards fintech companies, which only strengthens their position in the competitive industry. Savvy investors know when to make the move, and now is the time to invest in the best fintech stocks.
Best fintech stocks to buy: Visa (V)
One of the best fintech stocks of all time is Visa (NYSE:V), and this is one stock that will never disappoint. The fintech giant has a global presence, and has generated over 90% returns in the past five years. Visa caters to over 100 million merchants, and its market share is steadily growing. It is one company that continued to thrive even in a high inflation environment.
As the world moves towards digitization and the usage of cards increases, we will see Visa perform even better. Although the stock is trading at a 52-week high right now, exchanging hands for $262, it remains one of the best buys. I believe V stock will hit $300 this year.
The company has a very successful business model which generates a significant amount of cash year- after-year. Visa processes a transaction when a card is used and it gets a cut from the transaction. It requires minimal cost to operate and this helps report impressive profit margins. Visa’s margin is the widest of any fintech company and it is only going to keep growing in the years to come.
Visa uses this cash to reward shareholders has a dividend yield of 0.79% and pays a quarterly dividend of $0.52. The company saw a 15% rise in the net income to hit $17.3 billion in 2023, and if it can maintain the same growth rate, we could see it become the best in the industry.
2023 was a year of high inflation, high-interest rates, and lower consumer spending, if the company can manage to report an impressive growth rate during this period, it can certainly do better in 2024. Do not wait for a dip in the stock because you could end up waiting forever.
SoFi Technologies (SOFI)
Trading at $8.53, SoFi Technologies (NASDAQ:SOFI) stock is down 11% year-to-date and this drop is a solid buying opportunity. The stock looks cheap at the current level and it could double later in the year. Several catalysts are working for SoFi, and while many investors like to have a cautious approach, I believe this company could pay off in the long-term. The resumption of student loan payments will have an impact on the company, and it could see a higher demand for personal loans.
That said, the third quarter results showed an improvement in deposits and this is proof that consumers trust SoFi over other traditional banks. The deposits reached $15.7 billion at the end of the third quarter and it shows that the company will not have to rely on high funding sources for growth.
SoFi did suffer more than it should have but it is getting stronger each quarter. The CEO expects to report a profit this quarter and we could see that take the stock higher. My InvestorPlace colleague Yiannis Zourmpanos believes SoFi is near the brink of a 300% jump over the next two years.
The company uses liquidity to invest in new products that enhance user experience and it has managed to hit $10.4 million in new products in the recent quarter. This has also led to user growth, and the company saw an addition of 717,000 new members which is an impressive 47% year-over-year rise.
SOFI is trading at a huge discount right now and it may not be possible to get the stock at such a cheap rate.
Affirm (AFRM)
The one stock to buy before fourth-quarter earnings is Affirm (NASDAQ:AFRM). The Buy Now, Pay Later company has gained massive popularity since the Black Friday Sales, and I believe it will report strong revenue numbers driven by the holiday season. Consumer spending is improving and this has led to higher revenue for companies like Affirm.
The biggest driving force for the company is its partnerships with some of the largest e-commerce companies including Amazon (NASDAQ:AMZN), Shopify (NYSE:SHOP), and recently Walmart (NYSE:WMT). These partnerships continue to drive revenue. While Affirm is still unprofitable and it will take time to break even, there are chances of the stock moving upwards after strong quarterly results.
Due to high inflation in 2023, the government had to resort to interest rate hikes, and this led to people spending down the amount they accumulated over the years. This led to higher debt and the massive popularity of payment options like BNPL. Consumers now like the option of buying something right away and then paying for it over a long tenure. While the company does face stiff competition in the industry, it continues to win because of its strong partnerships.
Trading at $45 today, the stock has soared 380% over the past year, and while it might not be possible to repeat the rally, there is a strong chance to soar at least 50% this year. The last few months have been excellent for the company, and I believe the fourth quarter results will lead to a rally.
On the date of publication, Vandita Jadeja 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 writer, subject to the InvestorPlace.com Publishing Guidelines.