Wall Street Favorites: 3 Fintech Stocks With Strong Buy Ratings for May 2024

Stocks to buy

Fintech stocks to buy have been a recent favorite of growth investors. Why? The traditional finance system is long overdue for an overhaul and there are plenty of startup fintech companies that are ready to make a change. Already, investors have seen the fintech industry rapidly creating a global network of payment services that has made sending and receiving funds as simple as ever. 

Of course, investing in fintech stocks hasn’t always been as lucrative for investors. It turns out that converting traditional finance users to a new digital platform isn’t always the easiest process. Still, given the rapid adoption of mobile payments and online banking, fintech can expect to see a growing addressable market. Here are three fintech stocks that have a bright future for you to consider. 

Fintech Stocks to Buy: Robinhood (HOOD)

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Robinhood (NASDAQ:HOOD) is a popular fintech platform that offers users savings, investing and crypto access. The stock has been making headlines lately after the company turned a surprise profit in 2023. After some recent analyst upgrades, the median price target for HOOD sits at $20.43 which represents about a 20% upside from the current price. 

The company’s recent quarter illustrates how well Robinhood is doing. Robinhood saw a record $11.2 billion in net deposits and a 42% year-over-year (YOY) increase in its gold subscriber tier. Retirement assets reached $4.2 billion which is an increase of nearly $4 billion from the previous quarter. Finally, Robinhood saw a 224% YOY increase in crypto trading to $36 billion. All of this and Robinhood only fully entered its second market in the U.K. earlier this year. 

Valuation-wise, Robinhood trades at just 7.0x sales and has been growing its revenue at a 49% CAGR over the past five years. The company has successfully captured its loyal customer base of younger investors and is the overwhelming choice for Generation Z and millennials. If the company continues to expand its global market share, Robinhood should be a winner for decades to come. 

Toast (TOST)

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Toast (NYSE:TOST) is a fintech company specifically working in the restaurant management industry. It provides point-of-sales technology that is built on the Android operating system. Analysts agree that Toast likely has a bright future as almost every Yahoo! Finance analyst provided Toast with Buy or Strong Buy rating. The street-high price target of $32.00 represents a nearly 25% upside from the current price. 

Although TOST is known for its point-of-sale terminals, it has also been rapidly progressing into the software business. Toast has since built software platforms that integrate point of sales, such as its Kitchen Display System. Other platforms include order management for the kitchen, data analytics and payment processing. Although Toast is a relatively new entrant, it’s already making moves to multiple existing leaders like OpenTable.

Toast has a profile akin to many rising fintech software companies. While not yet profitable, it’s currently entering a hyper-growth mode and acquiring loyal customers. Toast has grown its revenue by a staggering 144% since 2021. Despite this, the stock is only trading at 3.5x sales. As the company continues to grow, the stock price will rise alongside its revenue.

Adyen (ADYEY)

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Last of the list of Fintech stocks to buy is Adyen (OTC:ADYEY), a Dutch fintech company that provides a range of services to enterprises and businesses across the globe. American investors may not be as familiar with Adyen, particularly because it trades on the OTC markets and the Euronext Amsterdam exchange. Nonetheless, the street has optimistic projections for this company, and the street-high price target for ADYEY is $22.61, which indicates a nearly 70% upside from its current price. 

This fintech platform focuses on providing merchant services for receiving payments via different methods like credit cards and online banking. If you’re looking for some American comparisons, look no further than Block (NYSE:SQ) or PayPal (NASDAQ:PYPL). For Adyen in particular, however, one of the biggest revenue drivers has been its land-and-expand approach, which has allowed it to create a strong network and recurring revenues within its customer base.

So why invest in Adyen? After all, you’ll pay a premium for the stock even on the OTC market. Shares are trading at more than 20x sales and 42.3x forward earnings. Nonetheless, Adyen’s financials are looking especially strong, and it has even grown its net income at a 40% CAGR over the past five years. As Adyen continues to grow its payment processing volume in the double digits through 2026, investors should turn their eyes to this foreign fintech gem.

On the date of publication, Ian Hartana and Vayun Chugh 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.

Chandler Capital is the work of Ian Hartana and Vayun Chugh.

Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.

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