Consumers and small businesses need easy access to cash for important purchases. Fintech companies offer these services and several perks to entice individuals to work with them over the competition.
The industry has gotten more competitive as digital banks and fintech companies have sprouted up. Financial institutions no longer need vast networks to compete if they have good online marketing.
Some fintech stocks have been top picks for many years, while others are up-and-coming. These are some of the top fintech stocks to consider.
American Express (AXP)
American Express (NYSE:AXP) combines financial strength with a reasonable valuation. The stock trades at a 19.5 P/E ratio while offering a 1.18% dividend yield. The yield has gotten smaller over the past few weeks due to the stock’s 26% year-to-date gain.
The company’s recent earnings report suggests that the gains will continue. American Express reported 11% year-over-year revenue growth and 34% year-over-year net income growth in Q1 2024.
The firm expects to generate 9%-11% revenue growth through 2026. The company expects EPS growth in the mid-teens during that span. American Express exceeded the EPS expectation by delivering 39% year-over-year growth for that metric.
The company trades at a more affordable valuation than its peers and currently has a rising net profit margin in the low double digits. American Express stock has more than doubled over the past five years. It has outperformed the S&P 500 during that stretch.
Visa (V)
Visa (NYSE:V) is the largest credit and debit card issuer based on market cap. The corporation has a market cap of roughly $550 billion and a 35 P/E ratio. The company also has a 0.76% dividend yield and an impressive growth rate. Visa achieved an annualized dividend growth rate of 18.18% over the past decade.
The fintech stock is up by 68% over the past five years and regularly delivers net profit margins above 50%. Those are some of the highest profit margins in the industry, and Visa is still achieving top-line growth.
Visa reported 9% year-over-year revenue growth and 17% year-over-year GAAP net income growth in Q1 FY24. Cross-border volume was a big growth driver and grew by 16% year-over-year.
The company used some of its profits to repurchase shares. Visa allocated $3.4 billion to buy back 14.0 million shares of its common stock. Visa has an additional $26.4 billion of authorized funds for stock buybacks.
SoFi (SOFI)
SoFi (NASDAQ:SOFI) is an up-and-coming digital bank that has made quite a name for itself. The company has over 7.5 million members and added 585,000 in Q4 2023. SoFi offers competitive financial products like bank accounts, loans and credit cards. The online bank can offer better rates since it has less overhead.
Revenue and earnings are still growing at impressive rates. The company notched $6615 million in GAAP net revenue, a 35% year-over-year improvement. The company also reported a positive GAAP net income of $48 million compared to a net loss in the same period last year.
SoFi has ambitious growth plans that make the current stock price look like a bargain if the corporation achieves its objectives. Management expects revenue growth to range from 20% to 25% each year beyond 2026. The company expects GAAP EPS to range from $0.55 to $0.80 per share in 2026.
The recent switch to profitability bodes well for the long-term bullish outlook. The company has good leadership and can deliver meaningful long-term returns if it continues on its trajectory.
On this date of publication, Marc Guberti held a long position in SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.