Technology stocks have been leading the stock market rally as of late and one industry within the tech sector has been particular good to investors. I am talking about fintech stocks. Just what are fintech stocks?
Fintech stocks are financial companies that are disrupting the way we traditionally do business thanks in large part to technology. For example, if bitcoin were a publicly traded company, they would be classified as a fintech stock. They are changing the way we pay for things away from physical currency and plastic and more towards digital currency.
But, bitcoin cannot be traded on the stock exchange so we have to settle for other companies that are making the most of technology. Below, you will get exposed to 3 great fintech stocks that are leading the way into the next decade and beyond.
#1. Square (NYSE:SQ)
Even if you have not heard of Square, you certainly have been exposed to what they do. Have you recently shopped at a merchant, who when handing over your credit card, swipes it using their phone or tablet? If so, then you know Square.
Square provides small businesses the ability to accept credit cards. Traditional credit card terminals require upfront and ongoing costs, units and maintenance. With Square, you get a device that plugs into your phone or tablet and for a small processing fee, you can accept credit cards.
While this was the launching pad for Square, they have only scratched the surface of what they are capable of. In fact, here are 2 new segments Square is involved with:
- Instant Cash: usually when accepting credit cards, you have to wait a few days for the cash to show up in your bank account. With this feature, the cash is instantly deposited into your bank account. This is a lifesaver for small businesses that need the cash flow now.
- Square Capital: this segment offers micro loans to small businesses. If you ever ran a small business, you know the amount of paperwork a traditional bank requires when applying for a loan. And most times even with all of the documentation, you still get rejected. Square Capital allows you to bypass banks and get micro loans right from Square.
In their most recent earnings release, earnings per share came in at $0.07 beating estimates by $0.02. Revenues were up 26% to $551 million.
As Square continues to innovate, the stock price should respond favorably over the coming years.
#2. Vantiv Inc (NYSE:VNTV)
Vantiv is an unknown player in the credit card processing segment. But while unknown to most consumers, they are well known by retailers. This is evident by them working with 8 of the 25 largest U.S. retailers in addition to over 400,000 small businesses.
A few years ago, the company partnered with Microsoft (NASDAQ:MSFT) and AT&T (NYSE:T) to begin offering both mobile and cloud based payment systems. Just this past August, Vantiv announced the details of a merger with Worldplay to grow the company’s international exposure.
When the company recently released earnings, earnings per share came in at $0.83, beating by $0.01. Revenues were up 10% to $530 million.
With the addition of an international exposure, this stock should experience healthy growth and synergies in the coming year.
#3. Visa Inc (NYSE:V)
I know what you are thinking, how in the world is Visa included in a post about fintech stocks? While traditionally Visa was just a credit card company, it has held up well with the times and innovated. As such, it is considered a fintech stock.
This is because Visa began its digital wallet offering, Visa Checkout in 2014. Since then, it has landed over 12 million users and does over $113 billion in annual payment volume. Not too shabby for a mature company like Visa.
And Visa isn’t done yet. They recently joined forces with Visa Europe to expand its presence in the European Union where credit cards are becoming much more popular.
Add this to the fact Visa is now accepted at Costco (NASDAQ:COST) and the future looks healthy for this company.
In fact, earnings per share came in at $0.86 beating by $0.05 and revenues were up 26% to $4.56 billion. Suffice to say, Visa isn’t going away anytime soon.
Final Thoughts
Overall, these are 3 hot fintech stocks to look into. The name of the game right now is acquiring other businesses in a strategic manner so that these companies can become best of breed. Only time will tell which ones made the right moves.
But in the meantime, these mergers should help boost the bottom line of their balance sheets. And as an investor, should boost your bottom line as well.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.