Many believe that “blockchain is the greatest innovation on the internet, since the internet itself” and the recent cryptocurrency roller coaster ride has attracted many. However, fintech itself is a broad category and cryptocurrency is only one part of it. The pandemic pushed the cashless payments space to grow by leaps and bounds last year, and its benefits have drawn many people to cling to it, even after the virus crisis has ended. While cryptocurrency or bitcoin still faces many uncertainties, fintech offers many other products and services under its umbrella that investors can rely on for better returns.
Tap-and-Pay is the new standard
The fintech umbrella includes payment processing, online and mobile banking, online and peer-to-peer lending, person-to-person payments, software and financial services. But its tap-and-pay services have been one of the most attractive segments. In fact, at the start of the pandemic, a survey in the payments journal showed that 51% of U.S. shoppers started using mobile wallets and other tap-to-go credit card facilities. And 58% of people who did not use contactless cards were more likely to do so as the woes of the pandemic intensified.
According to a Precedence Research study published in an article by globenewswire.com, the global contactless payments market size was valued at $ 1.05 trillion in transaction value in 2019 and is expected to reach a CAGR of 20.01% for cross $ 4.60 trillion by 2027.
Fintech: more than just payment gateways
In addition to providing payment gateways or contactless payment services, fintech provides banking, lending, and other financial services based on artificial intelligence (AI). Companies like Upstart offer online lending platforms that use AI to automate the lending process and offer enhanced security to prevent fraud. Additionally, technologies such as robo-advisers that provide automated, algorithm-based, or AI-based financial planning services to offer advice and automatically invest client assets are steadily growing in importance. This simplifies investing for new traders and offers easy account setup, robust goal planning, portfolio management, security, exclusive customer service, comprehensive portfolio training and most importantly, lower fees. to those of human advisers.
Big banks like Goldman Sachs are transforming their investment banking and wealth management services by using their Marcus personal loan and savings platform to connect with clients who can avoid the hassle and time constraints of business. physical branches. These technology-driven approaches help maximize efficiency and consumer value.
IPOs boost fintech space
Along with other positive aspects, initial public offerings (IPOs) and funding continue to drive the fintech space. On June 8, payment processor Marqeta, Inc. began trading on the Nasdaq under the symbol MQ. The company’s IPO price was $ 27 per share and it closed 13% higher at $ 30.52 the next day, bringing its market cap to just over $ 16 billion. Marqeta is the pioneer of payment technology designed to detect potential fraud and ensure money is routed correctly. In fact, the pandemic-driven fintech adoption has boosted this business, helping it issue more than 320 million cards to its customer to date.
Another corporate payments company, Flywire Corporation, started trading on the Nasdaq under the ticker FLYW, and was listed at $ 24 per share when it went public on May 23. The company announced a 38% increase in revenue in the last quarter, accredited by online shopping due to the COVID-19 pandemic and is focusing on payments in the education, healthcare and trips.
5 stocks to watch
The potential of fintech is quite attractive. It has been found that despite the dramatic growth in cashless payments over the past year, there is still a considerable number of cash transactions around the world. In fact, as people start to adapt to online banking, the fintech space will continue to thrive. Therefore, we have selected five stocks to watch.
EVERTEC, Inc. EVTC is dedicated to transaction processing, enabling points of sale and online merchants to accept and process electronic payment methods, such as debit, credit, prepaid and Electronic Benefit Transfer (EBT) cards. .
This company, which is part of Zacks’ financial transaction services business, has an expected earnings growth rate of 50% for the current quarter. Zacks’ consensus estimate for the company’s current year earnings has been revised up 5.5% over the past 60 days. EVERTEC currently holds a Zacks Rank # 2 (Buy). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
Equifax inc. EFX provides information solutions and human resource business process outsourcing services, and engages in financial and credit reporting, as well as credit scoring and modeling. This company, which is part of Zacks’ financial transaction services business, has an expected earnings growth rate of 6.3% for the current quarter. Zacks’ consensus estimate for current year earnings for this Zacks Tier 2 company has been revised up 9.8% in the past 60 days.
PayPal Holdings, Inc. PYPL operates as a technology platform and a digital payment company. The company’s expected profit growth rate for the current year is 22.2% compared to the Zacks Internet – Software industry’s projected profit growth of 2.5%. Zacks’ consensus estimate for the company’s current year earnings has been revised up 3.5% over the past 60 days. PayPal currently carries a Zacks Rank # 3 (Hold).
Fiserv, Inc. FISV provides payment technology and financial services. The expected profit growth rate of this Zacks Rank # 3 company for the current year is 23.1% compared to the projected profit growth of the Zacks financial transaction services industry of 21.1% . Zacks’ consensus estimate for the company’s current year earnings has been revised up 0.4% in the past 60 days.
Square, Inc. The SQ creates tools that allow sellers to accept card payments; also provide reports and analysis, as well as a next day settlement. The company’s expected profit growth rate for the current year is 78.6% compared to Zacks Internet’s software industry’s projected profit growth of 2.5%. Zacks’ consensus estimate for the company’s current year earnings has been revised up 31.6% in the past 60 days. Square currently wears a Rank 3 Zacks.
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