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Grab 5 Fintech Industry Stocks for Long-Term Gains

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The financial technology space - or fintech industry - is expected to benefit from expanding transaction volumes resulting from the widespread adoption of digital means. The ongoing digitization movement, triggered by the pandemic, is a major catalyst for this industry. 

What is the Fintech Industry? 

The fintech indusry represents a transformative investment space within a hybrid sector merging finance and technology. These companies encompass a variety of services, such as online banking, peer-to-peer payments, insurance, cryptocurrency and cybersecurity, among others.

We have selected five stocks from the financial technology space, namely, PayPal Holdings Inc. (PYPL - Free Report) , Affirm Holdings Inc. (AFRM - Free Report) , Fidelity National Information Services Inc. (FIS - Free Report) , LendingClub Corp. (LC - Free Report) and SoFi Technologies Inc. (SOFI - Free Report) . 

These companies have double-digit earnings per share (EPS) growth potential for next year along with stable revenue growth on a year-over-year basis. These stocks have seen strong earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fintech Industry Thriving

A higher Internet penetration rate and increased usage of smartphones contribute to the increased uptake of digital payments. In light of the prevailing scenario, it has become inevitable to build an enhanced contactless payments suite or upgrade the existing ones.

Improved consumer spending implies greater utilization of product and service offerings of financial transaction services players. This, in turn, offers an opportunity for industry players to process higher transaction volumes. Also, the ease with which e-commerce shopping can be done within the comfort of one’s home is likely to provide an impetus to growth in consumer spending.

Buy 5 Fintech Stocks for Long-Term Gains

PayPal Holdings Inc.

Zacks Rank #1 PayPal is benefiting from robust growth in total payments volume. Strengthening customer engagement on the company’s platform is a major positive. Venmo’s improving monetization efforts and rising adoption rate across various platforms are aiding the total active accounts growth. 

The solid momentum of core peer-to-peer and PayPal Checkout experiences is a tailwind. Well-performing merchant services are also positive. Strengthening presence in both the United States and international markets is contributing well to PYPL. Accelerating transaction revenues of PYPL are likely to continue driving revenues.

Strong Next-Year EPS Growth Potential for PYPL Stock

For next year (ending December 2025), PayPal has a projected EPS and revenue growth rate of 10.8% and 7.6%, respectively. The Zacks Consensus Estimate for the current-quarter, current-year and next-year earnings has improved over the last 60 days.

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Affirm Holdings Inc.

Zacks Rank #1 Affirm Holdings operates a payment network in the United States, Canada, and internationally. AFRM’s platform includes point-of-sale payment solutions for consumers, merchant commerce solutions, and a consumer-focused app. AFRM’s commerce platform, agreements with originating banks, and capital markets partners enables consumers to pay for a purchase over time. 

AFRM has active merchants covering small businesses, large enterprises, direct-to-consumer brands, brick-and-mortar stores, and companies with an omni-channel presence. AFRM’s merchants represent a range of industries, including sporting goods and outdoors, home and lifestyle, travel and ticketing, electronics, fashion and beauty, equipment and auto, and general merchandise.

Impressive EPS and Revenue Growth Projection for AFRM Shares

For this financial year (ending June 2025), Affirm Holdings has a projected EPS and revenue growth rate of 50.9% and 29.6%, respectively. Further, for the next financial year (ending June 2026), EPS and revenue growth rates are projected at more than 100% and 21.1%, respectively. The Zacks Consensus Estimate for the current-quarter, next-quarter current-year and next-year earnings has improved over the last 30 days.

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Fidelity National Information Services Inc.

Zacks Rank #2 Fidelity National Information Services’ organic growth in the banking and capital market solutions is buoying its results. Management forecasts net revenues to be between $10.12 billion and 10.17 billion for 2024. FIS’ strategic focus on digital transformation positions it to leverage global economic changes in the future. 

The launch of Atelio expands FIS’ footprint in embedded finance. FIS invests in technology and innovation across high-growth markets, thereby expanding its total addressable market. FIS’ inorganic growth strategy, focus on cryptocurrency and shareholder value-boosting efforts are commendable.
Robust Next-Year EPS Growth Potential for FIS Shares

For next year (ending December 2025), FIS has a projected EPS and revenue growth rate of 11.7% and 4.1%, respectively. The Zacks Consensus Estimate for the current-quarter, next-quarter, current-year and next-year earnings has improved over the last 60 days.

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LendingClub Corp.

Zacks Rank #2 LendingClub offers an online marketplace for loan approval, pricing, servicing and support operations as well as a regulatory and legal framework, which connects borrowers and investors. LC operates as a bank holding company providing a range of financial products and services in the United States. 

LC offers deposit products, including savings accounts, checking accounts, and certificates of deposit. LC also provides loan products, such as consumer loans comprising unsecured personal loans, secured auto refinance loans, and patient and education finance loans, and commercial loans, including small business loans. 

LC Stock Shows a Solid Next-Year EPS Growth Estimate

For next year (ending December 2025), LendingClub has a projected EPS and revenue growth rate of 85.5% and 16.8%, respectively. The Zacks Consensus Estimate for the current-quarter, current-year and next-year earnings has improved over the last 60 days.

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SoFi Technologies Inc.

Zacks Rank #2 SoFi Technologies provides various financial services in the United States, Latin America, and Canada. SOFI operates through three segments: Lending, Technology Platform, and Financial Services. SOFI offers lending and financial services and products that allow its members to borrow, save, spend, invest, and protect money. SOFI also offers personal loans, student loans, home loans, and related services. 

SOFI Shares See Excellent Next-Year EPS Growth Estimate

For next year (ending December 2025), SoFi Technologies has projected EPS and revenue growth rate of more than 100% and 14.2%, respectively. The Zacks Consensus Estimate for the current-quarter, current-year and next-year earnings has improved over the last 60 days.

Zacks Investment Research
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