Fintech is a broad area made up of firms that apply new technology to financial industries. It’s a mix of the words finance and technology. Companies that design novel digital payment-processing solutions and those that design and manage person-to-person payment apps are termed fintech.
Fintech’s potential is quite exciting. Despite the recent rise of the cashless payments market, the bulk of payment transactions still occur with cash throughout the world. Despite the fact that internet banking organizations often provide better interest rates and cost structures than traditional banks, most people still choose branch-based banking for their financial requirements. Fintech is well on its way.
Fintech is a wide phrase that refers to any business that uses technology to improve the financial sector. Fintech encompasses a wide range of companies. Some of the items and services they provide include processing of payments, peer-to-peer (P2P) and online lending, financial services, financial software, payments made to individuals directly, and of course, online and mobile banking.
Let’s have a look at a few stocks from the growing fintech sector that the experts say would make excellent additions to our growing portfolios:
Green Dot Corp (GDOT)
Green Dot (GDOT) is one of the market’s first fintech firms, having invented the prepaid debit card two decades ago. The company’s debit-card business is still significant, but it’s losing ground to startups like Square (SQ) and PayPal (PYPL), who are coming up with fresh and imaginative ways to solve the same problem. GDOT, on the other hand, has begun to try to capitalize on its primary edge — its banking charter — by establishing a savings account with a 2% interest for Walmart Money Card clients and selecting a highly experienced CEO to lead the bank’s banking initiatives.
GDOT’s year-over-year financials are solid, with indicated growth in all categories. Its latest earnings report beat EPS and revenue expectations by 17.98% and 7.75%, respectively. GDOT has beaten analysts’ projections for the previous two quarters as well. Although they don’t report again until next year, the current quarter’s forecast shows us an EPS of 31 cents per share and $308.2 million in sales. GDOT also shows projected annual growth in both categories. GDOT has a median 12-month price target of 54.50, with a high of 72.00 and a low of 45.00 from analysts that provide 12-month price forecasts. The consensus shows a rise of 23.67% from its current price, and it also gives GDOT a buy rating.
Square Inc (SQ)
Square’s (SQ) platform has expanded over the years from a means for merchants to take credit cards using their mobile phones to a large-scale small-business and individual financial ecosystem. In addition to SQ’s core small-business clients, the firm now processes card payments at a yearly pace of more than $100 billion and has a booming small-business loan platform (Square Capital). One central element of SQ‘s business that is fascinating is its Cash App, which has a year-over-year quadrupled active user base and nearly infinite potential to expand its consumer financial services.
Although SQ missed expectations slightly on its latest quarterly earnings, it has otherwise done well overall for the year. Analysts’ forecasts show growth on both annual and quarterly EPS and revenue. Until they report earnings again, SQ gives us an EPS of 27 cents per share and revenue of $4.1 billion. Sadly, SQ doesn’t currently pay a dividend, but that should not be the only deciding factor when buying a stock. SQ’s growth speaks for itself, and the experts have spoken as well. SQ has a consensus price target of 307.50, with a high of 380.00 and a low of 210.00 among analysts providing 12-month price projections. The forecast is a 35.39% rise from its current price. The consensus among analysts is to buy stock in SQ.
PayPal Holdings Inc (PYPL)
PayPal Holdings (PYPL) is the uncontested leader in online payments, but the company is far more than that. For one reason, its Venmo person-to-person payment technology has risen to the top of the market and is rapidly expanding its large user base. PYPL has also been purchasing complementary firms and forming strategic alliances that might significantly extend its addressable market. PYPL now has over 361 million active accounts, but CEO Dan Schulman predicts that number could rise to a billion in the near future.
PYPL doesn’t report earnings again for a while, but it has crushed analysts’ projections on EPS, in particular for the fiscal year as a whole. PYPL beat EPS expectations in the last three fiscal quarters by 3.13% (Q3), 7.31% (Q2), and 19.99% (Q1). The forecasts from analysts indicate growth in EPS and revenue, both annually and quarterly. PYPL shows an EPS of $1.14 per share for the current quarter, with $6.9 billion in sales. Its year-over-year financials indicate growth in all categories. Analysts offering 12-month price forecasts for PYPL have a median target of 280.00, with a high of 345.00 and a low of 190.00. The estimate reflects a 38.03% increase from its last price. PYPL’s buy rating is solid.
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