14 cheap, strong Fintech stocks to buy

2022-07-13 0 By

With strong expectations for revenue growth and earnings growth, fintech should outperform the market over the next two years.Wells Fargo has a new fan in fintech and digital payments, and he says now is a good time to buy them.Analyst Jeff Cantwell on April 5 has “bullish” ratings on 14 companies in the fintech and digital payments sectors, meaning all have “overweight” ratings.They include big names like Shopify (SHOP), Block (SQ) and PayPal (PYPL).Other companies selected include Adyen (ADYEY), Bill.com (BILL), Fidelity National Information Services (FIS), Fiserv (FISV), Flywire (FLYW),Global Paywire (GPN), Marqeta (MQ), Paymentus Holdings (PAY), Toast (TOST), and Wex (Wex).Cantwell sees a $1.5 trillion market growth opportunity for fintech companies over the next 10 years, with an annual growth rate of 6 percent.The analyst said the sector would be driven by a combination of five themes.As more people adopt digital payments, digitalization is their preferred theme.The second is modernization, as both businessmen and consumers are looking for modern tools to support their daily lives.Another theme is the shift by some fintech companies to cloud-based service models for account processing, fraud protection, e-wallets and other services.Consolidation and the emergence of cryptocurrencies should also be seen as major drivers.”We believe the fundamentals of these companies will remain strong despite the challenges posed by the current geopolitical/macro environment,” Cantwell wrote.He expects their total revenue to grow 33% this year and 26% by 2023, with a two-year average growth of about 30% — nearly 3 percentage points faster than before the 2019 coronavirus outbreak.He added that fintech earnings are expected to grow 15% this year and 17% next year, well ahead of the 8% and 11% growth expected for the S&P 500.At the same time, valuations have increased the appeal of these fintech stocks.Cantwell notes that these companies are currently trading at about 5.5 times sales for the next 12 months and 16 times earnings per share for the next 12 months.He added that the price-earnings ratios of these companies had fallen sharply in the past six months and were now trading at a discount to the S&P 500’s 20 times 2022 earnings and 18 times 2023 earnings.But he said the discount would not last forever, so investors should seize the opportunity now.”We expect the fundamentals of these companies to strengthen in 2022 or 2023 and the current discount to the market will not be sustained,” Cantwell wrote.With our strong expectations for revenue growth and earnings growth in the sector, fintech should outperform the market over the next two years, and the valuation gap between fintech and the broader market is now narrowing, which is good for fintech stocks.”Despite bullish analysts, most of those companies fell on April 5 amid a broader sell-off in tech stocks.Article | barron’s writer Eric j. savi, editor (Eric j. Savitz) | | Wu Yuting translation small color copyright statement: barron’s (barronschina) original articles, without permission, shall not be reproduced.Fintech Stocks Look Cheap. Why It Could Be Time to Buy.(This article is for informational purposes only and does not constitute the provision or reliance of investment, accounting, legal or tax advice.)