In this article, we discuss the 10 best fintech stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Fintech Stocks To Buy Now.
There is little doubt that the COVID-19 pandemic accelerated the wider adoption of fintech around the world. However, figures from the Global Fintech Adoption Index reveal that fintech adoptions had already been doubling every two years on average before the advent of the coronavirus crisis. Between 2015 and 2019, the fintech industry grew by 48%. According to a report by Research and Markets, the global fintech market will reach $190 billion in size by 2026, growing at a compound annual growth rate of over 13%.
Digital payments and software firms are expected to lead this growth. However, it has become abundantly clear that cryptocurrencies are also likely to play a huge role in the market in the coming years. Investors eager to take advantage of this boom in the fintech universe should check out some top firms in the industry. Some of the best fintech stocks to buy now include PayPal Holdings, Inc. (NASDAQ:PYPL), Sea Limited (NYSE:SE), and Square, Inc. (NYSE:SQ), among others discussed in detail below.
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Our Methodology
Here is our list of the 10 best fintech stocks to buy now. These were picked based on their basic business fundamentals, hedge fund sentiment, and analyst ratings.
The hedge sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Fintech Stocks To Buy Now
10. Affirm Holdings, Inc. (NASDAQ:AFRM)
Number of Hedge Fund Holders: 25
Affirm Holdings, Inc. (NASDAQ:AFRM) has recently struck two partnerships that will help it expand business and improve brand recognition. In late October, the company announced that it would be partnering with American Airlines to allow customers of the latter a new, more flexible way of paying for airline services using the platform of the former. On November 1, the firm revealed a partnership with ACI Worldwide that integrated the platform of Affirm into the software ecosystem of ACI.
Affirm Holdings, Inc. (NASDAQ:AFRM) stock has soared on the back of these announcements. Morgan Stanley, Mizuho, and Barclays are all bullish on the stock in the long term with Overweight, Buy, and Overweight ratings, respectively.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Thrive Capital is a leading shareholder in Affirm Holdings, Inc. (NASDAQ:AFRM) with 3.9 million shares worth more than $265 million.
Just like PayPal Holdings, Inc. (NASDAQ:PYPL), Sea Limited (NYSE:SE), and Square, Inc. (NYSE:SQ), Affirm Holdings, Inc. (NASDAQ:AFRM) is one of the top fintech stocks to buy now.
9. Futu Holdings Limited (NASDAQ:FUTU)
Number of Hedge Fund Holders: 31
Futu Holdings Limited (NASDAQ:FUTU) owns and runs an online brokerage and wealth management platform. Although the stock has pulled back in recent weeks amid a Chinese government crackdown against dual listed firms, the fundamentals of the company remain strong as ever. On August 31, the company posted earnings for the second quarter, reporting a revenue of $203 million over the period, up more than 129% year-on-year.
A new data privacy law in China, which came into effect at the beginning of this month, has put fintech stocks like Futu Holdings Limited (NASDAQ:FUTU) under pressure from regulators, a report in a leading Chinese newspaper revealed in October.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Futu Holdings Limited (NASDAQ:FUTU) with 3.4 million shares worth more than $621 million.
8. Opendoor Technologies Inc. (NASDAQ:OPEN)
Number of Hedge Fund Holders: 35
Opendoor Technologies Inc. (NASDAQ:OPEN) features on our list of the top fintech stocks because the firm has built a solid business around a digital platform for residential real estate trades. Filings from early October show that the company has accumulated total debt facilities of close to $9 billion, enough to buy 40,000 homes across the US at an average price of $350,000 per home. The stock is also outperforming competitors like Zillow Group by over 20 percentage points on a year-on-year basis.
Citi analyst Nicholas Jones recently resumed coverage of Opendoor Technologies Inc. (NASDAQ:OPEN) stock with a Buy rating and a price target of $40, noting that the firm could grow in a real estate market that favored home sellers.
At the end of the second quarter of 2021, 35 hedge funds in the database of Insider Monkey held stakes worth $765 million in Opendoor Technologies Inc. (NASDAQ:OPEN), up from 33 in the preceding quarter worth $1 billion.
In its Q1 2021 investor letter, Baron Fund, an asset management firm, highlighted a few stocks and Opendoor Technologies Inc. (NASDAQ:OPEN) was one of them. Here is what the fund said:
“The sales of Opendoor Technologies Inc. was a trim for position-sizing purposes after orders-of-magnitude type stock returns over the last year for these investments. We continue to believe the company is a disruptive innovator with open-ended long-term opportunities.”
7. SoFi Technologies, Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders: 39
Morgan Stanley analyst Betsy Graseck recently initiated coverage of SoFi Technologies, Inc. (NASDAQ:SOFI) stock with an Overweight rating and a price target of $25, underlining the “powerful revenue growth story” of the company. The stock has soared in the past few days as reports suggest that the company will soon obtain a bank charter for the business. SoFi had acquired Golden Pacific Bancorp for the purpose earlier this year.
SoFi Technologies, Inc. (NASDAQ:SOFI) recently announced that it had partnered with Pagaya Technologies, another fintech firm, to improve the financial services it offers to users. Under the partnership, SoFi Technologies will add artificial intelligence to its platform.
At the end of the second quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in SoFi Technologies, Inc. (NASDAQ:SOFI).
In its Q2 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and SoFi Technologies, Inc. (NASDAQ: SOFI) was one of them. Here is what the fund said:
“We invested in SoFi Technologies, Inc., an online consumer finance company or “neobank,” through a SPAC-PIPE transaction. The company was founded in 2011 to refinance student loans into lower interest rates and has since expanded into other financial services, such as bank accounts, debit and credit cards, brokerage, and cryptocurrency trading. We believe that SoFi now has the broadest product suite of any neobank in the U.S., and we view the core lending segment as a differentiated product line that few other neobanks offer. With most competitors targeting un-banked and under-banked individuals, we believe SoFi’s focus on a higher-income demographic coupled with its wide range of products positions it to be one of the leading digital banks. The company’s product breadth enables it to serve customers throughout their lives, such as offering student loan refinancing for new graduates or brokerage accounts when those graduates accumulate savings. SoFi seeks to cross-sell products to existing customers, driving higher customer engagement and retention. SoFi also owns a technology platform called Galileo that is used to power many other neobanks. We believe Galileo gives SoFi attractive exposure to the broader universe of fast-growing consumer FinTech companies. Over time, we expect SoFi to continue adding members and cross-selling additional services, which should drive improving unit economics and earnings growth.”
6. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 49
Coinbase Global, Inc. (NASDAQ:COIN) has rallied the past few weeks after a lean spell over the summer. The rally is attributed to the increase in price of cryptocurrencies. The company has also inked an agreement with the National Basketball League (NBA), although the terms of the deal have not been disclosed. As part of a plan to push further into blockchain, there are reports that the company plans to launch an NFT platform soon.
On October 26, investment advisory Citi initiated coverage of Coinbase Global, Inc. (NASDAQ:COIN) stock with a Buy rating and a price target of $415, highlighting that the stock offered direct exposure to cryptocurrency adoption.
Among the hedge funds being tracked by Insider Monkey, New York-based firm ARK Investment Management is a leading shareholder in Coinbase Global, Inc. (NASDAQ:COIN) with 5.6 million shares worth more than $1.4 billion.
In addition to PayPal Holdings, Inc. (NASDAQ:PYPL), Sea Limited (NYSE:SE), and Square, Inc. (NYSE:SQ), Coinbase Global, Inc. (NASDAQ:COIN) is one of the fintech stocks that hedge funds are buying.
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Disclosure. None. 10 Best Fintech Stocks To Buy Now is originally published on Insider Monkey.
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