10 Best Fintech Stocks To Buy In 2024
In this article, we discuss 10 best fintech stocks to buy in 2024. If you want to skip our detailed discussion on the fintech industry, head directly to 5 Best Fintech Stocks To Buy in 2024.
The integration of artificial intelligence, machine learning, and blockchain is playing a pivotal role in reshaping fintech, offering increased efficiency and heightened security. According to Vanguard, emerging trends such as digital currencies, 'buy now, pay later' models, mobile payment solutions, smart contracts, neobanking, and RegTech are gaining prominence as secure and convenient alternatives for customers, contributing to the evolution of the fintech industry. Fitch Ratings foresees a mixed performance in 2024 for fintech issuers in North America and Europe, with anticipated revenue growth for many, albeit expecting more subdued EBITDA growth and margin expansion compared to recent years. Capital allocation decisions face a higher scrutiny due to a significantly increased cost of capital since 2022. Despite challenges, fintechs are gaining market share from traditional financial institutions, and consumer spending, a crucial industry driver, remains robust in North America. While certain European markets experienced weakness in 2023, potential macro-related risks persist as consumers utilized some of their excess savings.
NASDAQ reported a 24.6% increase in fourth-quarter profit, driven by robust performance in its solutions business as it expands beyond traditional market-sensitive activities into data and analytics. The quarter saw a 32.3% surge in revenue to $860 million, with the financial technology business contributing significantly, rising to $399 million from $231 million the previous year. The exchange posted an adjusted profit of $395 million, or 72 cents per share, surpassing the previous year's $317 million, or 64 cents per share, in the fourth quarter. NASDAQ’s net revenue reached $1.1 billion, a 23% increase compared to the same period in 2023, marking the first time NASDAQ surpassed a billion dollars in a single quarter.
The fintech sector is experiencing significant expansion. For example, Jack Henry & Associates, a fintech firm based in Monett, Missouri, raised its full-year profit forecast and reported increased second-quarter earnings. The company's performance was boosted by steady growth in its processing, services, and support segments. The demand for financial technology remains strong, particularly among small and mid-sized institutions seeking to enhance their digital capabilities. The company anticipates 2024 earnings per share in the range of $5.09 to $5.13, surpassing its previous forecast of $4.98 to $5.04. In the second quarter ending December 31, Jack Henry reported net income of $1.26 per share, compared to $1.10 per share a year earlier. The company experienced a 7.3% increase in services and support revenue to approximately $312 million, and an 8.9% rise in processing revenue to $233.71 million.
To benefit from the growth potential in the fintech industry, some of the best stocks to invest in include Visa Inc. (NYSE:V), PayPal Holdings, Inc. (NASDAQ:PYPL), and Mastercard Incorporated (NYSE:MA).
Our Methodology
We chose the top communication stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 910 elite hedge funds tracked as of the end of the third quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
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Best Fintech Stocks To Buy In 2024
10. StoneCo Ltd. (NASDAQ:STNE)
Number of Hedge Fund Holders: 32
StoneCo Ltd. (NASDAQ:STNE) is a financial technology and software solutions provider operating in Brazil. It specializes in facilitating electronic commerce for merchants and integrated partners across in-store, online, and mobile channels. On January 22, Goldman Sachs upgraded StoneCo Ltd. (NASDAQ:STNE) to Buy. Since early October, payment stocks have outperformed the Ibovespa index, and Goldman analysts suggest that the outlook is "slightly more favorable." Goldman Sachs attributes this positive trend to banking initiatives, decreasing interest rates, and stabilizing growth trends.
According to Insider Monkey’s third quarter database, 32 hedge funds were bullish on StoneCo Ltd. (NASDAQ:STNE), compared to 35 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 10.7 million shares worth over $114 million.
Like Visa Inc. (NYSE:V), PayPal Holdings, Inc. (NASDAQ:PYPL), and Mastercard Incorporated (NYSE:MA), StoneCo Ltd. (NASDAQ:STNE) is one of the best fintech stocks to watch.
Ave Maria World Equity Fund made the following comment about StoneCo Ltd. (NASDAQ:STNE) in its Q3 2023 investor letter:
StoneCo Ltd. (NASDAQ:STNE) provides solutions that enable merchants and integrated partners to conduct electronic commerce seamlessly across in-store, online, and mobile channels in Brazil. StoneCo has faced near-term operational challenges because of the pandemic and high levels of inflation in Brazil. The company appears to be moving past these challenges and it appears that the successful integration of the newly acquired software business with its payments business will drive substantial shareholder value longer term.
9. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 47
Global Payments Inc. (NYSE:GPN) is a payment technology and software solutions provider operating globally. The company operates through three segments – Merchant Solutions, Issuer Solutions, and Consumer Solutions. It is one of the best fintech stocks to invest in.
On February 2, Evercore ISI raised its rating for Global Payments Inc. (NYSE:GPN) from In Line to Outperform. Analyst David Togut anticipates a consistent improvement in the company's financial performance in 2024. This optimistic outlook is based on the anniversaries of divestitures in its Netspend and gaming businesses, the cumulative cost synergies from the EVP Payments acquisition, and the company's strategic position in high-growth, technology-enabled products.
According to Insider Monkey’s third quarter database, 47 hedge funds were bullish on Global Payments Inc. (NYSE:GPN), compared to 55 funds in the prior quarter. William B. Gray’s Orbis Investment Management is the leading stakeholder of the company, with 7.14 million shares worth over $824 million.
Artisan Mid Cap Fund made the following comment about Global Payments Inc. (NYSE:GPN) in its Q3 2023 investor letter:
“Among our top contributors were Argenx, Atlassian and Global Payments Inc. (NYSE:GPN). Global Payments is a provider of payments technology solutions for merchants. Increased competition in the fintech sector has significantly reduced the company’s valuation over the past couple of years. However, we have stuck by the company while it shifted toward durable growth areas such as software and omnichannel commerce, and as it made substantial cloud investments to future-proof its underlying technology stack. Shares rallied after the company reported better-than-expected financial results and management increased its guidance for the year.”
8. Nu Holdings Ltd. (NYSE:NU)
Number of Hedge Fund Holders: 50
Nu Holdings Ltd. (NYSE:NU) operates a digital banking platform providing financial services in Brazil, Mexico, Colombia, and internationally. The company offers credit and debit cards, mobile payment solutions, savings accounts, business accounts, cryptocurrency trading through NuCrypto, investment products like NuInvest, personal unsecured loans, and an in-app 'buy now pay later' solution. It is one of the best fintech stocks to monitor. On November 14, Nu Holdings Ltd. (NYSE:NU) reported an adjusted net income of $355.6 million and a revenue of $2.1 billion, which exceeded market expectations by $50 million.
According to Insider Monkey’s third quarter database, 50 hedge funds were bullish on Nu Holdings Ltd. (NYSE:NU), compared to 44 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the leading stakeholder of the company, with more than 107 million shares worth $776.6 million.
White Falcon Capital Management stated the following regarding Nu Holdings Ltd. (NYSE:NU) in its fourth quarter 2023 investor letter:
“The top 5 positions in the portfolio were: Precious Metals royalty basket, Nu Holdings Ltd. (NYSE:NU), AMD Amazon.com and Converge Technology Services. We often talk about our investment in Nu Holdings but have not presented you with a detailed research report. Our cost base on Nu is about $4 per share while the stock is currently trading for $9 per share. We continue to hold this position and, in the appendix to this letter, we are attaching our thesis on Nu Holdings. We are of the opinion that Nu is a rare company with the powerful combination of substantial market opportunity, an excellent business model, and an outstanding management team.
Nu Holdings is a $40 bn market capitalization company listed on the NYSE that provides digital banking platforms and digital financial services in Brazil, Mexico, Colombia. It offers Nu credit and debit cards; savings solutions, such as Nu Personal Accounts, and a digital account solution that supports all personal finance activities…” (Click here to read the full text)
7. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 60
Block, Inc. (NYSE:SQ) is a technology company focused on financial services. Its products include Square, offering integrated technology solutions for commerce and financial services; Cash App, allowing users to send, spend, or invest money in stocks or bitcoin; Afterpay, connecting consumers and businesses; and TBD, which is developing an open-source platform and developer infrastructure for global economic participation. Block, Inc. (NYSE:SQ) is one of the top fintech stocks to invest in.
On January 30, BTIG raised its rating for Block, Inc. (NYSE:SQ) from Neutral to Buy. The upgrade is based on the strength of Block's individual units, Cash App, and Square ecosystems, and the potential for increased growth through their interconnectedness. BTIG also appreciates the company's heightened emphasis on cost management and anticipates that Block, Inc. (NYSE:SQ) will achieve its target of a mid-20s adjusted operating margin by 2026.
According to Insider Monkey’s third quarter database, 60 hedge funds were long Block, Inc. (NYSE:SQ), compared to 66 funds in the prior quarter. Andreas Halvorsen’s Viking Global is the largest stakeholder of the company, with 12.3 million shares worth $545.5 million.
Here is what Baron FinTech Fund has to say about Block, Inc. (NYSE:SQ) in its Q3 2023 investor letter:
“Block, Inc. provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. Shares fell due to a confluence of factors, including slowing growth, a brief system outage, and the departure of a key executive who ran the Square business segment. Ongoing investor concerns over consumer spending and a recession did not help sentiment. Nevertheless, Block reported strong quarterly results with 27% gross profit growth and adjusted EBITDA more than doubling. We believe Block’s businesses are resilient, and greater management focus on cost discipline should drive further margin expansion. We continue to own the stock due to Block’s long runway for growth, durable competitive advantages, and track record of innovation.”
6. Fiserv, Inc. (NYSE:FI)
Number of Hedge Fund Holders: 70
Fiserv, Inc. (NYSE:FI) is a global provider of payment and financial services technology, operating through three segments – Acceptance, Fintech, and Payments. On February 6, Fiserv, Inc. (NYSE:FI) reported a Q4 non-GAAP EPS of $2.19 and a revenue of $4.92 billion, outperforming Wall Street estimates by $0.04 and $240 million, respectively. Fiserv anticipates a 15% to 17% organic revenue growth for 2024, compared to an estimated 8.79% year-over-year growth. The company also projects adjusted earnings per share in the range of $8.55 to $8.70, exceeding the consensus estimate of $8.60, indicating a growth rate of 14% to 16%.
According to Insider Monkey’s third quarter database, 70 hedge funds were bullish on Fiserv, Inc. (NYSE:FI), compared to 68 funds in the prior quarter. Harris Associates is the biggest stakeholder of the company, with nearly 15 million shares worth $1.7 billion.
Fiserv, Inc. (NYSE:FI) ranks 6th on our list of the best fintech stocks. The list includes companies like Visa Inc. (NYSE:V), PayPal Holdings, Inc. (NASDAQ:PYPL), and Mastercard Incorporated (NYSE:MA) as well.
Giverny Capital Asset Management made the following comment about Fiserv, Inc. (NYSE:FI) in its Q3 2023 investor letter:
“Turning to our new positions, we have been following Fiserv, Inc. (NYSE:FI) for a couple of years now and finally bought a position during the third quarter. Fiserv has two businesses that reinforce each other: it is a key technology provider to several thousand global banks and credit unions. Mid-sized financial institutions need to offer a full complement of digital banking services to compete with larger national banks, but they can’t afford to build out an internal tech capacity. It’s more cost effective to outsource to Fiserv.
Fiserv’s other business is, broadly, payment processing: when you tap and pay at your favorite restaurant or retailer, you may be using a Fiserv device. That device, in turn, may connect directly to the business owner’s bank – and Fiserv built out the bank’s tech stack. The synergy here is important. Fiserv can sell terminals to the restaurant itself, but banks may also sell Fiserv products as part of their customer relationships. There is terrific distribution synergy
For the next few years, Fiserv’s growth should be led by Clover, a payments acceptance system that offers merchants faster transaction times, better fraud protection and stronger operational controls than many existing acceptance networks. While Clover is a clear leader in acceptance, it has a small market share today and could grow at double digit rates for some years. In turn, that should drive solid earnings growth for Fiserv. I believe the stock trades for a low-teens multiple of likely 2024 earnings, an attractive price for a steady compounder.”
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Disclosure: None. 10 Best Fintech Stocks To Buy In 2024 is originally published on Insider Monkey.