Back to top

Image: Bigstock

Don't Overlook These Top Fintech Stocks After Interest Rate Cuts

Read MoreHide Full Article

Lower interest rates can do wonders for financial technology companies (Fintech) which strive to improve and automate financial services.

In an ever-evolving technological landscape and business environment, several popular fintech stocks are standing out and should benefit as the Fed decided to cut the central bank's benchmark rate by 50 basis points today.

PayPal’s Resurgence: Payment Solutions Leader

Sporting a Zacks Rank #1 (Strong Buy), PayPal’s (PYPL - Free Report)  steady growth trajectory has become more believable thanks to the company’s relevancy as one the largest transaction facilitators for customers and merchants.

Posting a sharp rebound this year, PYPL is up nearly +20% in 2024. Analysts have become more bullish on PayPal’s expanding partnerships and innovation with a few collaborations listed below.

1. Fiserv (FI - Free Report)  partnership- Aimed at streamlining checkout experiences for merchant clients in the U.S.

2. Uber (UBER - Free Report)  partnership- Multi-year collaboration to capitalize on the ride-sharing giant’s global expansion and scale PayPal into worldwide markets.

3. PayPal has also expanded its partnership with Apple (AAPL - Free Report) , creating an integrated payment ecosystem with Apple Pay and its subsidiary Venmo (VMEO - Free Report) . Notably, PayPal has enhanced its features for Venmo in regard to services for small business owners.

IBKR & HOOD Stock: Investment Bank Growth

Expanding as electronic market brokers, International Brokers (IBKR - Free Report)  and Robinhood Markets' (HOOD - Free Report)  stock both sport a Zacks Rank #2 (Buy).

Increasing in popularity since going public in 2021, Robinhood is expected to post its first profit this year with EPS now expected at $0.76 versus an adjusted loss of -$0.61 a share in 2023. The Fed’s decision to cut rates is perfect timing for Robinhood as the renowned cryptocurrency trading company is expected to be profitable in fiscal 2025 as well.

Zacks Investment Research
Image Source: Zacks Investment Research

Pivoting to Interactive Brokers, its bottom line expansion is very enticing with EPS projected to pop 18% in FY24 to $6.81 compared to earnings of $5.75 per share last year. Plus, FY25 EPS is projected to rise another 2%.

Zacks Investment Research
Image Source: Zacks Investment Research

More intriguing is that IBKR and HOOD have soared over +50% year to date but still trade at fairly reasonable forward P/E multiples of 19.3X and 29.7X respectively.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

Suggesting more upside in these top fintech stocks is that earnings estimate revisions have remained higher. This trend should continue with the Fed’s much-anticipated decision to cut rates finally upon us.

Published in