Growth stocks have been kept alive in recent months on the back of soaring inflation, expectations of interest rate hikes by the Federal Reserve and lingering worries about Russia and Ukraine. Financial technology (fintech) companies, which fall under the technology sector, have been particularly vulnerable as investors continue to transition into safer and cheaper assets in search of protection against the very turbulent stock market. As the war on cash – which refers to the shift away from cash payment methods in favor of digital payments – escalates, many fintech companies are poised to benefit in the long run .
Understanding the upward trajectory of the industry and also knowing that fintech stocks have been battered lately, investors should be eager to get their hands on some of these companies. While he may not feel comfortable investing in current market conditions, buying stocks at current levels could result in significant gains in the future.
In that regard, let’s look at two fintech stocks that may be worth your time and money right now. Oh, and they both trade for less than $100 per share.
Sofi Technologies (SOFI -5.71%) provides financial products such as student and auto loan refinance, mortgages, personal loans, credit cards, investments and banking services via mobile app and desktop. Over a six-month period, the company’s stock price has crashed more than 70% to less than $7 a share today. Nonetheless, the high-growth fintech company ended 2021 on a high note, recording $1.01 billion in adjusted sales, a 63% year-over-year growth.
Fourth-quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) closed at $5 million, marking the sixth consecutive quarter the metric ended positive. The company posted a net loss of $1 per share in fiscal 2021, a notable improvement from its loss of $4.30 per share a year ago.
Although the extension of the federal student loan repayment moratorium – which was originally set to expire on May 1 – until August 31 will negatively affect SoFi’s business, investors should still prepare for another strong exit this coming year. Wall Street analysts forecast the company’s revenue to hit $1.47 billion in 2022, which will translate to a 45% increase from 2021.
Similarly, consensus earnings estimates of a loss of $0.45 per share show SoFi closing in on profitability. Given the company’s ability to overcome permanent obstacles and its very low price-to-sales ratio of 6.3, SoFi is an attractive investment opportunity today.
PayPal (PYPL -4.39%) offers investors an advantageous combination of stability and growth. The fintech giant, which owns 50% of the global payment processing software industry, has 429 million active accounts, easily making it the most accepted digital wallet in North America and Europe.
In 2021, the company grew revenue and earnings 18% and 19% year-over-year to $25.4 billion and $4.60 per share, respectively. PayPal’s knack for generating cash is also improving rapidly.
Although investors can expect growing pains this year due to eBay’s transition to its own payment platform and inflationary pressures, PayPal’s long-term growth track remains intact. Sitting at the epicenter of a massive secular growth industry, management predicts its total addressable market could reach $100 trillion. And given its price-earnings multiple of 28, representing a roughly 70% discount to its historical average, investors should be rushing to buy PayPal stock.
Fintech is our future
The war on money is in full swing, and these two fintech stocks are trading at favorable levels today. SoFi’s growth story has been remarkable so far, and there are no signs of the company slowing down any time soon. PayPal has, indeed, been there, done that in the area of digital payment. This fintech top dog has plenty of room for growth.
Do your long-term portfolio a favor and consider buying shares of these two stocks today.