The financial industry has seen a significant transformation in the last few years, marked by the emergence of fintech apps. Ranging from digital payments to peer-to-peer lending apps, these platforms have provided a more transparent and secure means of transacting. As a result, consumer trust in these platforms is on the rise with businesses benefitting from greater convenience and better connectivity with customers.
The rise of fintech apps has created a shift towards a largely cashless society and experts predict that nearly 91% of the transactions in the U.S. will be online this year. Keeping with this trend, the global fintech market is expected to exceed a $1,152 billion valuation by 2032.
The high growth potential of fintech apps serve as a tailwind for companies leading the charge. For investors, this optimistic outlook presents a great opportunity to get behind the top names in the sector.
Affirm (AFRM)
It’s been a bumpy ride for Affirm (NASDAQ:AFRM) these last few years but several signs signal brighter days ahead.
As an early mover in the buy now, pay later (BNPL) space, the company saw its stock surge during the pandemic-induced lockdowns. However, a decline in digital spending and inflationary headwinds soon took center stage and sapped Affirm’s growth. In fiscal year 2023, the company’s revenue grew just 18% compared to a 55% spike in 2022 year-over-year (YOY).
Nevertheless, recent developments in the company give investors good reason to remain bullish on this stock. Shares of the company gained last week on news that Affirm’s BNPL loans will now be available on Apple’s (NASDAQ:AAPL) Apple Pay. AFRM stock was up 8% following the news.
Now, taking a holistic view, this partnership will not have any short-term impact on its finances but it will certainly open doors for Affirm in the long-haul. The integration with Apple Pay will allow the company to expand geographically and branch out into additional service offerings.
Moreover, things are also looking up for Affirm on the numbers front. After a slow 2023, the company’s revenue is up by 40% this year. Compound annual growth rate (CAGR) is also projected at 20% in the next five years. That’s a rosy outlook worth investing in.
Affirm may not be at the top of its game right now. However, I think there are several tailwinds that make this one of the top fintech stocks to buy now for long-term returns.
Block (SQ)
Another stock that’s worth investing in this month is Block (NYSE:SQ) — formerly known as Square. The company was no stranger to the post-pandemic decline and has struggled with profitability over the last few years. Shares of Block are down 78% from its highs in 2021. However, the company shines in one area that will fuel its growth in the coming years: digital payments.
Block has certainly expanded its offering since its Square days but it is still best known for its core products, Square and Cash App. The payment apps continue to generate income for the company with its Cash App segment seeing a 49% increase in gross profit YOY in Q1 this year.
The company is also heavily invested in this ecosystem and is constantly adding new features to its platform. According to Block’s management, it has barely scratched the surface of a total addressable market (TAM) of $130 billion in digital payments. This hints at endless growth opportunities for the company in this space.
Block’s current price presents a great entry point for investors looking to capitalize on the top fintech stocks to buy now for future returns.
Visa (V)
When it comes to fintech platforms, Visa (NYSE:V) is definitely at the top of my list. After a pandemic driven dip in 2021, the stock has been on the rise since- growing its revenue by 10% YOY. This spike can be attributed to several trends.
For one, Visa’s status as the largest card network in the world means that it has plenty to gain from an increasingly cashless society. In 2023, the company managed $12.3 trillion in payment volume. This number will only grow as more people switch to digital payments.
Secondly, Visa will benefit from an increase in consumer spending. As global economies grow, the increase in spending will help the company maximize revenue. Visa is a high margin business and makes money on every small transaction. Its global presence and broad technology infrastructure across platforms presents a huge opportunity for revenue growth.
Moreover, the company is actively expanding its ecosystem with the launch of several initiatives. This includes a partnership with Amazon (NASDAQ:AMZN) to streamline services for cloud-native institutions and a collaboration with Dash Solutions to enhance the efficiency of instant payments.
Visa stock is trading at a high multiple and isn’t a bargain buy by any means. However, its strong market position in a digitally-driven payment landscape makes this one of the best fintech stocks to buy now.
On the date of publication, Divya Premkumar 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.
Divya has a background in finance and accounting and has worked in FP&A roles at Fortune 500 companies. She is an avid reader and enjoys writing on a variety of topics including stocks, crypto, blockchain and global policy.