3 Stocks to Buy for the Coming Cashless Society
Today’s article introduces three stocks to buy for a cashless society. Artificial intelligence (AI), machine learning and blockchain technologies are transforming the fintech industry, merging traditional models with cutting-edge solutions to drive efficiency, improve service delivery and enhance customer interaction. While higher interest rates initially put pressure on many fintech companies, anticipated declines in the second half of 2024 are expected to reignite growth in the fintech sector.
Recent research suggests the global fintech market is projected to reach a staggering $882.30 billion by 2030, boasting a robust 17% compound annual growth rate. Now we dive into three undervalued stocks to buy for the cashless society, presenting promising investment opportunities for March.
Shift4 Payments (FOUR)
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Among the first stocks to buy for cashless society is Shift4 Payments (NYSE:FOUR), which offers payment processing solutions to businesses, focusing on specific industries, including hospitality, leisure and gaming. Recently, the company released its fourth quarter and full-year results. Revenue increased 31% year-over-year (YOY) to $705 million, while end-to-end payment volume surged 55% YOY to $32.1 billion. Net income for the quarter stood at $19.2 million, or 21 cents per share. Adjusted free cash flow increased 33% to $75.3 million.
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In the coming quarters, Shift4’s vertical expansion strategy and partnerships will likely continue to drive growth and expand market share. With the recent acquisition of Appetize, which develops cloud-based point of sale (PoS) software, Shift4 has greatly increased its market share in the sports and entertainment industry, adding over 600 venues to its customer base.
On February 28, FOUR stock jumped almost 13% on the news that Fiserv (NYSE:FI) and Amadeus IT Group (OTCMKTS:AMADF) are the two main contenders competing to acquire this fintech company. Shares are trading at a valuation of 22.1 times forward earnings and 1.9 times trailing sales. The 12-month median price forecast for the fintech stock stands at $90.50.
SoFi (SOFI)
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Next up on our list of stocks to buy for cashless society is SoFi (NASDAQ:SOFI), which mainly targets young professionals with a comprehensive financial services platform. Management has delivered significant growth and sustained momentum amid interest rate hikes.
In late January, the fintech group reported its first profitable quarter in its history. Fourth-quarter revenue increased 35% YOY to $615 million, translating into a net income of $48 million. Younger customers are driving SoFi’s growth, while the company added almost 585,000 new accounts during the period, representing a 44% YOY increase.
Meanwhile, loan originations increased 45% YOY, driven by a 41% increase in personal loans. Interest rate cuts through the year are expected to bring more money into its financial ecosystem, with more loans that result in higher net income. As the company scales its business, revenue growth, along with cost efficiency, is expected to boost profitability in the coming years. In fact, management projects total revenue to increase at a compound annual growth rate of 20% to 25% through 2026.
So far in 2024, SoFi stock is down 7% and is trading at a valuation of 4.03 times sales. The 12-month median price forecast for SOFI stock stands at $9.25.
StoneCo (STNE)
Source: T. Schneider / Shutterstock.com
Brazilian fintech StoneCo (NASDAQ:STNE) is the final name among our stocks to buy for cashless society. The rapidly growing company boasts a robust payment-processing business, generating significant revenue and profitability despite persistent macroeconomic volatility in Brazil.
Third quarter revenue increased 25% YOY, while adjusted net income more than quadrupled. StoneCo’s client base and total payment volume have seen a 42% and 20% YOY increase, respectively. Following five consecutive quarters of profit growth, the company boasts an eye-watering 14% profit margin.
As this Brazilian company expands into a wider range of services, including loans and bank accounts, it is primed to generate higher revenue at lower costs, leading to improved profitability. Expanding in the market with significant economic growth potential is expected to boost StoneCo’s market cap in the long run.
Given Brazil’s successful fight against inflation and expected rate cuts on the horizon, the fintech company is expected to beat estimates and increase guidance later in 2024. Management claims it has captured less than 1% of what it believes is its market opportunity of about $11 billion.
Yet, after rallying more than 100% over the past year, STNE stock is down 3% year-to-date (YTD). It trades at a valuation of just 12.45 times forward earnings and 2.4 times trailing sales. Finally, the 12-month median price forecast for STNE stock is $18.93.
On the date of publication, Tezcan Gecgil did not hold (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.
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