Fintech firms focus on using technology to enhance financial services, including payments, banking, and financial management. Among some of the more popular services that such companies deliver are cryptocurrencies, “buy now, pay later,” peer-to-peer payments, payments to businesses, and consumer banking.
Fintech firms have multiple, strong, positive catalysts, including the rapid, global digitization of financial transactions, continued, reduced reliance on cash worldwide, and the increased willingness of many consumers to use smartphone apps for financial transactions.
On the other hand, fintech firms face rising threats from large banks that are increasingly offering their own technology-oriented services. Moreover, the valuations of many fintech stocks are quite elevated. Despite these issues, many Wall Street analysts are enthusiastic about a multitude of fintech stocks. Here are three such names for investors to consider.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is a Latin American e-commerce and fintech giant. Of the 24 Wall Street analysts who cover the firm, 21 have a “strong buy” or a “buy” rating on the shares. Analysts have an average price target on the order of $1,935. That’s well above the stock’s current level of around $1,500.
In February, Barron’s recommended buying MELI stock after the company reported lower-than-expected fourth-quarter profit and its gross margin came in below analysts’ average estimate. Noting that the profit miss was due to high tax costs, Barron’s quoted Marvin Fong, an analyst at investment bank BTIG, as saying that the firm’s huge growth trumped its margin shortfall. Indeed, MELI’s gross merchandise volume and total payment volume soared 40% and 57% in Q4 versus the same period a year earlier.
Also importantly, analysts, on average, expect the company’s earnings per share to jump to $33.56 this year from $19.46 last year after its bottom line doubled in 2023.
Payoneer Global (PAYO)
Payoneer (NASDAQ:PAYO) operates a global cross-border payments platform, connecting millions of businesses and professionals across 200 countries. The company focuses on recruiting small and medium-sized businesses in emerging markets.
All eight Wall Street analysts who cover PAYO stock recommend it, and they maintain a “strong buy” consensus rating on the name, according to TipRanks. They also predict an average price target of $6.88, well above the stock’s current price of just below $5. Moreover, Citi recently identified PAYO stock as one of its top-rated names in the financial sector.
Last year, Payoneer’s sales climbed 32% to $831 million, while its operating income soared to $108.4 million from an operating loss of $16.5 million during the previous year. The shares have an attractive trailing price-earnings ratio of 20.4 times.
Shift4Payments (FOUR)
Shift4Payments (NYSE:FOUR) “provides end-to-end payment processing and technology solutions,” according to TipRanks. The website reported that of the 18 analysts covering the stock, 17 have issued “buy” ratings. Moreover, it predicts an average price target of $93.18, well above the stock’s current level of around $66.
In Q4 of 2023, FOUR’s top line surged 36% versus the same period a year earlier. In the same year, its end-to-end payment volumes soared 55% over the same time frame. Furthermore, for 2024, the firm expects its end-to-end payment volumes to jump 53%-685.
Also noteworthy, FOUR has become a takeover target, as CEO Jared Isaacman reported last month that it had received “multiple” inadequate buyout offers. On Feb. 28, Reuters reported that two of Shift4Payments’ competitors, Fiserv (NYSE:FI) and Amadeus (OTCMKTS:AMADY), had been considering buying FOUR. However, Amadeus quickly denied the report.
FOUR stock has a very attractive forward price-earnings ratio of 17.7 times and an extraordinarily low price-sales ratio of 1.6 times. The combination of its low valuation and possible takeover makes it one of the best fintech stocks to buy.
On the date of publication, Larry Ramer 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