Fintech
The 3 Most Undervalued Fintech Stocks to Buy in June 2024
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Money is a fundamental medium of exchange that allows people to purchase goods and services. Consumers are looking for ways to save money, get more out of it, and grow their money over time. Many fintech companies offer services that align with what consumers want.
You can put your money in a high-yield savings account if you want a decent return with minimal risk. Investors can also purchase stocks and other assets through a company’s brokerage accounts. Speaking of investors, they have many to choose from fintech stocks. However, these undervalued fintech stocks show a lot of promise.
Nu Holdings (NU)
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Nu Holdings (NYSE:NU) trades at a price-to-earnings ratio of 46x and has a market capitalization of $57 billion. The digital bank offers various financial products and services. Although the bank caters to global clients, the majority of its clients are located in Latin America.
Nu Holdings’ focus on the growth region has translated into impressive earnings. The stock has gained 72% over the past year and has caught the attention of Warren Buffett. The Oracle of Omaha has a position in Nu Holdings in Berkshire Hathaway (NYSE:BRK-A,)(NYSE:BRK-B) wallet.
Beyond Buffett’s interest, the stock’s recent gains and a large presence in Latin America, the bank has a lot to offer. Revenue increased 69% year-over-year to $2.7 billion the first quarter. Net income rose to $378.8 million, up 167% year-over-year.
Nu Holdings achieved a net profit margin of 29.7%, and a growing user base suggests its profits will continue to grow. A 26% year-on-year increase in total customer numbers suggests financial growth is here to stay.
Visa (V)
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Visa (NYSE:V) is a leading credit and debit card company that makes money from every transaction. The company regularly reports net profit margins above 50% and offers solid returns for long-term investors.
The stock is up 5% year to date and has gained 60% over the past five years. Investors get a return of 0.7% and a an impressive history of dividend growth. Over the last ten years the annualized growth rate is currently 18%.
The fintech company continued its momentum with 10% year-over-year revenue and net income growth the second quarter of fiscal 2024. Cross-border volume increased 16% year-over-year, while overall payment volume increased 8% year-over-year.
Wall Street analysts are feeling optimistic about the fintech stock. The stock’s average price target suggests a increase of 16%.. The stock has only four “hold” ratings while the other 21 analysts have rated the stock as “buy”. The higher price target of $345 per share implies that Visa shares can rise another 26% from current levels.
SoFi (SOFI)
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SoFi (NASDAQ:SOFI) has been challenging long-term investors for years. The premise is solid. SoFi is an online bank that is gaining a lot of attention and has recently become profitable. Despite the potential, its shares have fallen 34% over the past five years. Investors accelerated in 2021 and paid for it. Even now, shares are down 29% year to date.
SoFi latest financial results suggest that long-term optimism makes sense. Revenue grew 37% year over year, while the company generated net income of $88 million. This compared to a net loss of $34.4 million in the same period last year.
Management expects full-year GAAP net income to range between $165 million and $175 million. This is significantly higher than the recent forecast of between $95 million and $105 million. The midpoint of the new guidance is $170 million versus a market cap of $7.3 billion. This translates to a P/E ratio of 43x.
SoFi stock is getting cheaper, and its rapidly expanding profit margins should lead to appreciation for long-term investors. Don’t expect huge gains this year. SoFi looks like a multi-year growth story that may be attractive to investors with long time horizons.
As of the date of publication, Marc Guberti holds a long position in SOFI. The opinions expressed in this article are those of the writer, without prejudice to InvestorPlace.com Guidelines for publication.
Marc Guberti is a freelance financial writer at InvestorPlace.com who hosts the Breakthrough Success podcast. He has contributed to several publications, including US News & World Report, Benzinga and Joy Wallet.