Suppose you’ve spent much time within the investment realm. In that case, you more than likely know about the wide variety of investment opportunities available to you. Fromstocksand investment trusts to exchange-traded funds (ETFs) and real estate investment trusts (REITs), there’s no limit to the investment choices available to you, and the financial benefits that they have the potential to bring make them more than worth looking into.
This article intends to examine one of these investment opportunities, whose industry has grown significantly over the past several years and is not anticipated to stop any time soon; financial technology (FinTech) company stocks.
In short, financial technology companies make use of specialized software, programs, hardware solutions, and apps operating within the crossover space of the financial and technological worlds to provide a range of financial services to consumers and other businesses. Said financial services have made it much more accessible, more efficient, and more cost-effective for people to access, manage, and spend their money through the use of their mobile devices.
A wide range of FinTech companies have gained massive levels of success in recent years, especially as more FinTech services have steadily been developed and offered to the public. Some of the most notable FinTech innovations these companies use include mobile payments, budgeting apps,cryptocurrency and blockchain technology, robo-advising and stock trading apps, and crowdfunding platforms. As companies offering these services have surged in popularity and value, so have their stocks.
The Different Types of FinTech Stocks
Investors need to understand that FinTech is an extensive umbrella term that can be used in reference to a massive range of companies that apply technological innovations to the world of finance. While many of these companies are relatively similar and offer a wide range of general services and products to their customers, some FinTech companies focus on providing one or two select FinTech services.
Investors should understand the fundamental differences between these services and what those differences could potentially mean for the stock performance of the companies who offer them. Some of the most commonly provided products and services of these companies include:
Financial services and access to specialized financial software
The Benefits and Considerations of FinTech Stock Investing
Before we delve into the list of the top five FinTech company stocks to consider investing in, we must explore some of the costs, benefits, and important considerations that investors need to keep in mind before choosing to put their hard-earned money into FinTech stocks. For example, investors need to understand that, while many FinTech stocks are very popular and have proven quite profitable, they are not without a level of volatility and risk.
Because FinTech is still considered a newer, budding industry, investing in FinTech company stocks carries a significant deal of risk, so interested investors will need to possess an inherently high tolerance for risk and volatility. It must also be noted that FinTech company stocks are not suitable for those looking to make gains from short-term investments and should only be acquired by investors looking for sources of continuous long-term growth.
In short, FinTech stocks should only be acquired by savvy investors who are trying to develop an investment portfolio of long-term growth investments and who carry a significant level of both risk and volatility tolerance. If this happens to describe you and your investing style, then FinTech stocks may be the investment opportunity you have been searching for. Please continue reading to learn more about the most profitable FinTech company stocks currently available on the market. You would do well to consider adding to your portfolio before 2021 is over.
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The Top Five FinTech Stock Investments to Consider
Many FinTech companies are currently in operation whose stocks would serve as a fantastic addition to any investor’s portfolio, as long as they are willing to take on the volatility, risks, and long-term commitment that comes with said investments. With more of these companies coming out of the woodwork every year, it can sometimes be tricky to determine which ones will provide the best investment opportunities. The following are five of the most profitable FinTech companies currently in operation whose stocks have shown a tremendous deal of success in the returns they have brought to their investors. If you’re looking to add FinTech stocks to your portfolio this year, these are the companies you need to consider.
The first FinTech company whose stocks investors should consider adding to their portfolio is the world-renowned online payment platform, PayPal Holdings (NASDAQ: PYPL). That being said, it’s essential to understand that PayPal is so much more than just a payment platform. Over the years, the growth of its P2P and B2C payment operations has led it to become an industry leader within the FinTech world.
Its development is also expected to continue as it expands its base operations by acquiring a range of other complementary businesses, including the specialized online e-commerce tool and browser extension Honey, which was purchased for approximately $4 billion. Other subsidiaries that have been purchased in recent years also include P2P transaction platform Venmo, Xoom, Braintree, and iZettle.
As of 2020, PayPal had over 377 million active users and had accumulated an annual revenue of approximately $21.4 billion. It had also facilitated the completion of over 15.4 billion payment transactions of more than $936 billion. As of 8/3/2021, PayPal’s stocks are selling at a high of $274.54 per share and a low of $269.66 per share. They also have a total market cap set at $319.47 billion.
They have a currently established Strong Buy rating of 28 due to 25 buy and 3 hold ratings, as well as a neutral smart score of 6, according to the stock analyst experts at TipRanks. As much as 3.1% of all investment portfolios hold PYPL stock, with an average portfolio allocation of 6.12% and a very positive rating in terms of investor sentiment.
This second point on the list may be quite surprising for some people, given that Goldman Sachs (NYSE: GS) tends to bring to mind an image of old-school Wall Street Businesses– essentially the opposite of modern-day FinTech innovations and companies. Despite this, over the past several years, the company has begun making some significant leaps into the realm of FinTech through the incorporation of the Markus savings and personal loan platform and its exclusive offerings of Apple credit cards, which it began issuing bak in 2019. Further expansion into the FinTech realm is expected to occur as the company works to launch an investment platform and app-accessible checking accounts.
Goldman Sachs stocks are currently selling at a high of $380.82 per share, and a low of $371.77 per share, with a total market cap set to $128.22 billion. They have a currently established moderate buy ranking of 12 due to 9 buy, 2 hold, and 1 sell ratings and a neutral smart score of 7, according to TipRanks.
TipRanks also indicates that only 0.6% of all investment portfolios contain Goldman Sachs stocks, with approximately 5.31% of the portfolio’s assets being dedicated to them. The GS stocks also feature a vary positive ranking in terms of overall investor sentiment, which is considerably higher than the sector average.
Square (NYSE: SQ) was initially developed to serve as a way for merchants to accept small credit card purchases through their mobile phones but has recently expanded to become a large-scale small business, as well as an individual financial ecosystem in its own right. The company has developed into a thriving lending platform (Square Capital) for small companies and can process credit card payments at an annualized rate of more than $100 billion.
This expansion has brought Square into the spotlight, allowing it to go beyond its original small-business clientele base to gain significant traction with larger merchant companies. Much of their recent success can also be attributed to the development of the P2P money transfer service Cash App and the Square Online Store, which has allowed merchants to begin building massive omnichannel presences within the market.
Square stocks are selling at a high of $274.95 per share and a low of $262.78 per share, with an overall market cap of approximately $120.68 billion. TipRanks has given Square a moderate buy ranking of 28 due to 21 buy, 6 hold, and 1 sell ratings, as well as an outperforming smart score of 10, the highest possible ranking available.
Also, according to TipRanks, approximately 2.8% of all portfolios hold Square stocks with an average allocation of 6.48%. Much like Goldman Sachs, Square also has a very positive investor sentiment ranking, which is much higher than the average for the sector.
Frequently referred to as the Amazon.com of Latin America, MercadoLibre (NASDAQ: MELI) is a massive e-commerce business that has grown at an awe-inspiring rate over the past several years, primarily due to the performance of the Mercado Pago FinTech payments platform.
The company is currently responsible for processing billions of dollars in payment transactions every quarter, and its reach is continuing to grow rapidly. Further growth is strongly anticipated, mainly due to its recently established partnership with PayPal, whose services have become available for cross-border transactions through MercadoLibre.
MercadoLibre’s stocks are selling at a high of $1592.97 per share and a low of $1524.90 per share. The company holds an overall market cap of approximately $78.36 billion. TipRanks has awarded MercadoLibre a strong buy ranking of 18 based on 8 buy ratings, as well as an outperforming score of 10, much like Square.
Approximately 0.8% of all investment portfolios contain MercadoLibre stocks, with an average of 7.03% of the portfolio’s assets dedicated to said stock. Like Square and Goleman Sachs, MercadoLibre also holds a very positive investor sentiment ranking set much higher than the sector average.
Considered to be one of the oldest FinTech companies operating on the market, Green Dot (NASDAQ: GDOT) is well known for its role in helping to pioneer the rise of the prepaid debit card a little over two decades ago. Though the prepaid debit card industry is still a large one, they have recently begun losing market share to companies like PayPal and Square (discussed above) due to their new and innovative FinTech solutions.
Despite these losses, Green Dot is endeavoring to capitalize on its banking charter by developing new FinTech services, such as savings accounts with 2% yields to holders of the Walmart Money Card. They also offer a quality banking-as-a-service (BaaS) platform that is currently being used by several major corporations, including Uber, Apple, and Stash.
Green Dot stocks are currently selling at a high of $45.90 per share and a low of $43.88 per share, and the company holds a market cap of approximately $2.37 billion. They have been given a moderate buy rating of 6 according to TipRanks due to their 4 buy and 2 hold rankings and an underperforming score of 1, the lowest possible ranking available on the site.
Also, according to TipRanks, less than 0.1% of all investment portfolios include Green Dot stock holdings, with an average allocation of 4.01% of the portfolio’s assets. Green Dot has a very negative investor sentiment ranking at present, which is substantially below the sector average.
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