The unprecedented boom in fintech has made investing in fintech stocks a lucrative wealth generation tool.
Fintech companies have disrupted the traditional finance landscape, fueled by increased digitization and a thriving economy. The industry played a key role in transforming the financial sector by making digital transactions more accessible, transparent and efficient.
In the years to come, the fintech influence will only continue to grow. Research by The Boston Consulting Group shows that the global fintech market size will reach $1.5 trillion in revenue by 2030. That’s roughly five times its size today. The growth will be largely driven by GenAI tools and underbanked nations worldwide.
Given the optimistic outlook, fintech companies leading the charge will benefit from long-term growth rates. For investors, this presents a unique opportunity to earn high returns from fintech companies as they pioneer new solutions and reach untapped markets. On that note, here’s a look at three fintech stocks to add to your portfolio.
Pagaya Technologies (PGY)
Pagaya Technologies (NASDAQ:PGY) is among the new-age fintech stocks revolutionizing the financial sector with AI. The company’s tool helps financial institutions automate the credit evaluation process. It does this by using machine learning and big-data analytics to generate several data points for customized credit recommendations. This helps increase credit accessibility for customers while generating risk-adjusted returns for institutions.
Pagaya posted impressive results in its first quarter. Revenue came in at a record $2.42 billion, a 31% increase year-over-year (YoY) and over the estimated $2.4 billion. Net losses for the period amounted to $21.2 million, a significant decline from a $61 million loss a year ago. In addition to its strong financials, the company also announced a partnership with U.S. Bank (NYSE:USB) to increase access to personal loans.
Pagaya’s unique offering and strong performance in Q1 underscores its high growth potential. The company is set to report results on August 9th and anticipates continued momentum. Investors bullish on the future of fintech will find PGY stock a rewarding play.
Shift4 Payments (FOUR)
Shift4 Payments (NYSE:FOUR) offers payment processing solutions to businesses that accept online payments from customers. A suite of business intelligence tools complements this service to help clients manage their operations and analyze payment data. The company caters to over 200,000 customers with a strong focus on the hospitality and entertainment sectors.
Amidst a highly competitive fintech landscape, Shift4’s stock has seen its fair share of volatility. Shares are up less than 3% this past year despite reporting strong earnings in the previous quarter. Gross revenue for the period grew 29% YoY to $707.4 million, along with a 36% increase in EBITDA and a 34% rise in free cash flow.
In other words, Shift4 Payments has plenty of fuel left in the tank, and the dip presents a great buying opportunity. The company achieved an over 50% increase in payment volume in Q1, signaling greater adoption of its payment tool, SkyTab. Its ability to sustain its adoption levels will be a key to driving gains.
Although competitive headwinds persist, FOUR is one of the top fintech stocks in the market for investors seeking a high-risk, high-reward play.
Mercado Libre (MELI)
Mercado Libre (NYSE:MELI), commonly referred to as the “Amazon (NASDAQ:AMZN) of Latin America,” is an e-commerce powerhouse. While e-commerce is its largest segment, it also operates a logistics, advertising, online marketplace and fintech business. This diverse portfolio has made the company a dominant force in Latin American markets.
Mercado Libre is best known for its e-commerce business, but its fintech arm, Mercado Pago, is a high-growth business. Initially designed as a means of payment for its online marketplace, the fintech solution now offers several features, including loan and investing services. Nearly 50 million people across Latin America use the app.
The company’s financials reflect its massive success. Total monthly active users on its fintech platform grew by 38%, while total assets under management increased by 90% to $5.5 billion. Mercado Libre’s revenue for the period climbed 36% to $4.3 billion, fueled by a 49% increase in e-commerce revenue.
With a dominant market position and excellent growth prospects, MELI is one of the top fintech stocks for investors seeking long-term returns.
On the date of publication, Divya Premkumar did not have (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.
On the date of publication, the responsible editor held a long position in AMZN.