2 No-Brainer Fintech Stocks to Buy for $200 Right Now

Want to instantly add huge growth potential to your portfolio? Check out fintech stocks. These companies are like banks, but with the rapid growth rates of tech start-ups. Right now, two fintech stocks in particular look very attractive.

Follow Buffett in this quality company that trades at a discount

Warren Buffett’s portfolio is worth looking at. For more than a decade, he owned one of the most successful fintech stocks in recent memory: Visa (NYSE:V). It’s not hard to see what Buffett loves so much about this company. Payment networks benefit from the industry’s natural concentration. Visa currently controls 61% of the US credit and debit card market. MasterCard ranks second with a 25% market share, while only two other companies fill almost all of the last 14% of the market. This consolidation gives Visa immense pricing power. When combined with an easy-to-activate business model and a bit of leverage, the company is able to post consistent returns on equity that most companies can only dream of.

Note that Visa has been able to improve its return on equity without taking on too much debt. The cause of its performance, therefore, is not over-leveraging the balance sheet, but harnessing the benefits of reduced overhead costs fueled by network effects. As Visa grows, its competitive advantages only strengthen, allowing it to maintain its position as a duopoly in the industry. And because its services run largely on software, its profitability grows as the business expands. It’s a powerful business model, one that will likely grow from strength to strength in the years to come.

Visa shares trade at about 29 times earnings, about the same as S&P 500 average. Warren Buffett doesn’t seem to be selling any stocks at these prices. Both growth and value investors should consider this quality business.

Want even more growth? This stock is for you

Visa isn’t the only fintech stock Warren Buffett owns. Its portfolio also includes Not Holdings (NYSE: NO) — a fintech business with huge long-term growth potential.

Many investors have never heard of Nu, despite its $70 billion market cap. That’s because it operates exclusively in Latin America, where it boasts over 100 million customers. Its smartphone banking services took the Latin American market by storm in 2013, when it began capturing business from conventional banks that charged customers high prices for basic financial services. Nu services, meanwhile, were available to anyone with a smartphone. This business model reduced costs for Nu while giving it instant access to Latin America’s 650 million residents. The company launched in Brazil about a decade ago. And today, more than half of Brazilian adults are customers of Nu! Recent launches in Mexico and Colombia have brought similar success, and revenues are still up 65% year-over-year.

The story continues

To be sure, Nu stock isn’t cheap. The stock trades at nearly 10 times sales, which is almost unheard of for a bank stock. But this is a real fintech business, not a regular bank. Sales are growing so quickly that today’s premium can quickly seem like a bargain one day. This story will take patience to unfold, but investors looking for maximum upside should take a closer look.

Should you invest $1,000 in Visa right now?

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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Visa. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.

2 No-Brainer Fintech Stocks to Buy for $200 Right Now was originally published by The Motley Fool