Prediction: These could be the best Fintech stocks by 2030

The financial technology or fintech industry has been on a wild ride over the past few years. Low interest rates helped spur new products and services from companies, but then rapid interest rate hikes by the Federal Reserve slowed fintech growth.

However, a few companies have gone from strength to strength and are on their way to becoming potential winners for investors. Here are three fintech stocks that could do well in the coming years.

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1. SoFi technologies

SoFi technologies (SOFI) offers customers various fintech services, from savings accounts to investments and loans. And while people have their choice of online banks these days, SoFi continues to attract customers.

The company added 643,000 customers in the second quarter, a 41% increase over the same period last year, bringing the total number of SoFi customers to an impressive 8.8 million. The company’s sales growth this quarter was equally impressive, rising 20% ​​to $598.6 million.

But it’s SoFi’s profitability that long-term investors may want to consider. The company just had its third consecutive quarter of profitability and has made impressive strides in a short period of time. Net income was $17.4 million in the most recent quarter, up from a loss of $47.5 million in the year-ago quarter.

Despite SoFi’s boost, the company’s stock is still trading at a discount. SoFi’s price-to-sales (P/S) ratio is just 2.8 at recent prices, down from a P/S of 4 this time last year. Given the company’s strong customer base and profitability, I believe SoFi is shaping up to be a strong fintech play over the next few years.

2. PayPal Holdings

As an established player in digital payments, PayPal (PYPL 0.69%) has been forced to adapt to a rapidly expanding fintech space and fend off more competitors than ever before. To navigate a brave world of payments, the company has hit the reset button on its entire C-suite over the past year.

Under the new leadership of CEO Alex Chriss, PayPal is changing things. In the second quarter, PayPal’s generally accepted accounting principles (GAAP) earnings and revenue beat analysts’ estimates, rising 17% and 8%, respectively. The company’s active account transaction was also up 11%.

But it’s not just the recent surge in PayPal investors should consider. The company is also on solid financial footing, with free cash flow of $1.4 billion in the quarter and cash and cash equivalents of more than $18 billion.

With PayPal’s new leadership getting the company back on track, long-term investors have an opportunity to snap up PayPal stock while it’s still down. The share price has fallen 70% in the last three years. But with its comeback well underway, betting on the company’s current recovery could look like a smart move in a few years.

3. Visa

Visahis (V 0.17%) payment processing companies collect fees when businesses make sales through their payment platforms. The company is dominant in this space, holding around 40% of the market, ahead of all its US competitors.

Cashless payments are growing globally and will reach $2.2 trillion by 2027, according to Statista, up from $1.5 trillion today. And Visa’s leadership position in the payments space gives it an edge over rivals as this trend grows.

Visa has other opportunities that it uses with its “other revenue” category, which includes consulting, marketing and licensing services. Other revenue grew 31% in the fiscal third quarter (which ended June 30) and now accounts for about 9% of Visa’s total sales.

Even with Visa well positioned in the payments space, the company’s stock price has fallen about 6% over the past six months. That gives investors a chance to pick up Visa stock at a relative discount right now.

While all of these fintech stocks have great upside potential over the next few years, it’s worth noting that the market could experience some volatility as investors process rising unemployment and potential rate cuts from the Federal Reserve. Instead of fixating on short-term noise, focus on the long-term potential of the fintech market.