3 Fintech Stocks to Buy for Their Game-Changing Potential

Before we get into financial technology or fintech stocks, a little story might help. There’s a popular pizzeria in my neck of the woods. These people are from New York and I think I know people, so I’ll be diplomatic. While the pie is great, the problem is that the company — which has been in business since 1997 — is cash-only.

Delivery? Fuggedaboutit! An app to pick up your order? Are you serious? Pick up the phone and dial and maybe someone will pick up. If not, I think you’ll have to go to the counter. The only convenience in this place is that they offer an ATM inside. That’s it.

Now, these people could get away with such a business model. But that won’t fly with new business. As the Brookings Institution has stated, cash will soon become obsolete. Consumers are demanding more digitized conveniences, not less. So if you don’t have a brilliant recipe for authentic New York style pizza, you better check out these fintech stocks.

PayPal (PYPL)

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One of the powerhouses among fintech stocks, PayPal (NASDAQ:PYPL) reached a valuation peak in 2021. However, since then, PYPL stock has declined due to a combination of factors, including unfavorable monetary policy. However, some positive developments – including a better-than-expected jobless claims print – may bode well for overall consumer sentiment.

For investors looking for a bargain, PYPL stock may look interesting. Right now, the stock trades at 2.17 times past year earnings. This is below what was observed in the first quarter of this year, when the value stood at 2.49X. Overall, over the past year, the ratio landed at 2.32X. Therefore, through a reversion to the mean, PYPL can extend into the previous valuation.

Analysts are projecting sales for fiscal 2024 to reach $31.93 billion. If so, this would imply a growth rate of 14.8% compared to the previous year. In 2025, experts believe that revenue could reach $34.4 billion. The high side view stands at $35.12 billion.

Assuming 1.02 billion shares outstanding, PYPL shares are trading at a modest 1.87X the most optimistic sales forecast for next year. This is one of the finctech stocks to watch.

Paysafecard (PSFE)

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Based in the UK, Paysafe (NYSE:PSFE) offers end-to-end payment solutions in several international markets. Its payment platform offers a wide range of solutions such as credit and debit card processing, digital wallets, eCash and real-time banking services for certain entertainment verticals. These include iGaming, online betting and applications related to retail and hospitality.

Right now, PSFE stock is trading at just 0.71X last year’s earnings. That’s low compared to other players in the infrastructure software space, which run an average multiple of 4.14X. Of course, Paysafe’s price-to-sales ratio is higher than the previous year’s average of 0.5X. Still, there’s plenty of potential for growth.

In fiscal 2024, analysts project revenue to reach $1.71 billion. If so, that would represent a 6.6% increase over the previous year’s $1.6 billion. Next year, sales could rise to $1.83 billion. The high view also requires $1.92 billion.

Assuming 60.77 million shares outstanding, PSFE trades at 0.62X estimated 2025 sales. That’s very cheap given the company’s upside potential. It is one of the fintech stocks to watch out for.

ACI Worldwide (ACIW)

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Another player in the infrastructure software space, ACI worldwide (NASDAQ:ACW) develops, markets, installs and supports a range of software products and solutions to facilitate digital payments. In addition to processing credit, debit and prepaid card transactions, ACI is also involved in the areas of digital innovation and fraud prevention.

Now, the difference between ACIW stock and other rivals in the ecosystem is the valuation. The stock is currently trading hands at 3.21X sales. That’s a hot premium compared to many of its competitors. However, it is still lower than the sector average, making it undervalued. That said, over the past year, the average has been 2.39X.

Still, patient investors can get a deal with ACIW stock. Analysts are modeling for revenue of $1.58 billion by the end of the year. If so, that would translate to a 10.7% growth rate over last year’s print of $1.43 billion. And in fiscal 2025, sales could rise again by 7.3% to $1.69 billion. The high side view requires $1.72 billion.

Assuming 104.66 million shares outstanding, ACIW stock is trading at 2.82X 2025 earnings. It is at least one of the fintech stocks to investigate.

As of the date of publication, Josh Enomoto did not own (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com Publishing Guide.

At the time of publication, the responsible editor had (either directly or indirectly) no position in the securities mentioned in this article.