So far in 2024, the benchmark S&P 500 index has gained 15%. Conversely, the widely followed ARK Fintech Innovation ETF (NYSEARCA:ARKF) has underperformed, gaining only 2% year-to-date (YTD). This disparity suggests the potential for a catch-up rally within the fintech sector. With that said, here are three top fintech stocks to buy to tap into the sector’s rapid growth.
ADYEN (ADYEY)
First up on our list of fintech stocks to buy is Adyen (OTCMKTS:ADYEY), a global payment processing platform based in the Netherlands. The company facilitates online transactions, serving as a bridge between merchants and consumers.
In late April, Adyen published its first-quarter 2024 business update, showcasing impressive growth metrics. The company’s process volume reached 297.8 million euros, marking a 46% year-over-year (YOY) increase. Net revenue jumped 21% YOY to 438 million euros.
Investors are noting that Adyen has been active in forming strategic partnerships. For example, Decathlon Hong Kong has selected Adyen’s Unified Commerce solution and Prada SPA (OTCMKTS:PRDSF) integrated Adyen’s platform across its retail channels. Moreover, Adyen has partnered with Nelly Solutions to digitize medical practices. It has also launched Tap to Pay on iPhone in Canada, enabling businesses to accept contactless payments directly on iPhones without extra hardware.
Despite these steps, Adyen shares have declined over 4% YTD. Meanwhile, the current valuation still appears high at 40.3x forward earnings and 19.8x sales. Despite the decline in Adyen’s share price, analysts expect a potential advance of around 43% in the next 12 months. Therefore, interested readers can regard a potential dip in the share price as an opportunity to buy Adyen stock.
Nu Holdings (NU)
Disrupting the traditional financial landscape, Nu Holdings (NYSE:NU) is the next name among today’s fintech stocks to buy. The digital banking platform operates primarily in Brazil, Mexico and Colombia. Nu offers an app that allows customers to open accounts, manage finances, make payments and invest from their smartphones.
Nu management’s most recent quarterly earnings showcased the company’s robust performance and growth trajectory. Revenue came in at $2.74 billion for the first quarter of 2024, marking a 64% YOY increase, while adjusted net income was $443 million.
Investors are pleased that Nubank, a subsidiary of Nu Holdings, has surpassed 100 million customers in Brazil, Mexico and Colombia, becoming the first digital banking platform outside of Asia to achieve this milestone. In addition, it recently introduced cryptocurrency transfer functionality, further enhancing its service offerings.
So far in 2024, NU stock has surged more than 50%. Shares are trading at a forward price-to-earnings (P/E) ratio of 27.1x and a price-to-book (P/B) ratio of 8.2x. Wall Street has a 12-month median price forecast of $12.80 for NU, implying a 7% upside potential.
PayPal (PYPL)
We round up today’s exploration of top fintech stocks to buy with PayPal (NASDAQ:PYPL). A pioneer in online payments, PayPal operates a global digital payment platform, facilitating transactions between individuals and businesses. PayPal has also been expanding into cryptocurrency transactions, allowing users to buy, hold and sell cryptocurrencies within their accounts. Recently, PayPal has announced PYUSD (PYUSD-USD), its own stablecoin, on the Solana (SOL-USD) blockchain.
In the first quarter of 2024, PayPal delivered a solid performance. Revenue grew 10% YOY on a currency-neutral basis to $7.7 billion. Adjusted net income rose 13% YOY to $1.5 billion, with diluted net income per share up 20% to $1.40. The company’s strong performance came from branded checkout, large enterprises and international markets.
Since January, PYPL stock has declined nearly 3% YTD. PayPal stock in part came under pressure after Apple (NASDAQ:AAPL) unveiled new features, including Wallet’s Tap to Cash. Meanwhile, PayPal shares currently trade at a favorable valuation of 14 times forward earnings and 2.1 times sales. Analysts are optimistic, setting a 12-month price target of $75 for PYPL. Such a potential increase would suggest a 25% upside, underscoring confidence in PayPal’s growth outlook.
On the date of publication, Tezcan Gecgil 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.
Tezcan Gecgil, PhD, began contributing to InvestorPlace in 2018. She brings over 20 years of experience in the U.S. and U.K. and has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Publicly, she has contributed to investing.com and the U.K. website of The Motley Fool.