The world revolves around money. People use it as a medium of exchange to buy goods and services. Various middlemen make money from financial transactions, and other companies offer resources that can improve your finances.
These corporations fit within the fintech umbrella. Stocks in this industry often have millions of customers who use their loans, credit cards, investment accounts, and other resources. Investors looking to diversify into fintech stocks may want to consider these potential winners.
Sofi (SOFI)
Sofi (NASDAQ:SOFI) is a digital bank that serves more than 7.5 million members. The company has impressive growth rates across the board. Revenue increased by 35% year over year (YOY) in the fourth quarter of 2023.
The fintech company offers bank accounts, investment accounts, loans, credit cards, insurance policies, and other financial products. Revenue growth has always been good, but a switch to profitability has many investors excited. Also, Sofi’s first profitable quarter yielded a net income of $48 million, resulting in an 8% net profit margin.
Furthermore, management is optimistic about revenue and EPS growth remaining elevated for several years. EPS growth and annual revenue growth should range from 20% to 25% each year beyond 2026.
Finally, Sofi offers digital banking for all, but the company has been a bit of a hit for Gen Z and Millennials. The stock has had a bumpy tenure since its IPO. The stock is subject to sharp volatility but can be a good pick for long-term investors as profit margins improve.
American Express (AXP)
American Express (NYSE:AXP) makes a percentage of each transaction through its American Express credit cards. The stock more than doubled over the past five years and currently offers a 1.23% dividend yield. American Express has done a good job of raising its dividend and recently hiked it by 17%.
Also, the fintech company generated 11% YOY revenue growth in Q4 of 2023. Net income growth of 23% YOY helped to support the company’s dividend increase. And, full-year revenue increased by 14% YOY.
Moreover, leadership has a reasonable long-term vision for American Express. The company hopes to achieve 10% YOY revenue growth and EPS growth in the mid-teens each year. The corporation isn’t posting any flashy revenue numbers but offers a good deal at a 20 P/E ratio. Additionally, the company’s ability to generate cash flow and improve profit margins can make shares attractive for long-term investors. Recently, the net profit margin increased by 12.5% YOY to reach 13.5%.
Moody’s (MCO)
Moody’s (NYSE:MCO) specializes in risk management. The stock trades at a 44 P/E ratio and is up by 116% over the past five years. The corporation regularly reports profit margins above 20%. The fourth quarter of 2023 built on this trend.
Revenue increased by 15% YOY to reach $1.5 billion. That’s an acceleration from the company’s 8% revenue growth rate for full-year 2023. Also, net income growth came to 38% YOY.
Impressively, Moody’s uses generative AI to strengthen its products and offer more resources to its customers. This decision can help the company manage costs more effectively and tap into additional revenue opportunities.
The company has already done a good job with its costs. Moody’s reduced its costs from $984 million in Q4 2022 to $982 million in Q4 2023. And, full-year expenses only increased from $3.585 billion in 2022 to $3.779 billion in 2023. That’s a 5.4% growth rate which is lower than the company’s YOY revenue and net income growth.
On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.