These Financial Stocks Are Seeing A New Wave Of Investor Interest
Financial stocks are in the limelight as the world shifts at a steady pace from transactions with traditional banks. The sector comprises companies offering a wide range of services including payment, loans, savings, and other money management services for individuals and corporations. The sector is represented by the Financial Select Sector SPDR ETF (NYSEARCA: XLF). In fact, it has outperformed the broader market, with a total return of more than 20% year-to-date compared to the SPDR S&P 500 ETF Trust (NYSEARCA: SPY).
While traditional means of financial transactions such as banknotes are still prevalent globally, many other cashless transactions and innovative offerings have emerged in the financial space. With all that in mind, you might be looking for the next best financial stocks to shake up the industry. If that describes you, here are the five financial stocks to watch in the stock market before June.
Best Financial Stocks To Watch Now
- Affirm Holdings (NASDAQ: AFRM)
- Afterpay Ltd (OTCMKTS: AFTPF)
- PayPal Holdings (NASDAQ: PYPL)
- Paysafe Ltd (NYSE: PSFE)
- Visa Inc. (NYSE: V)
Affirm Holdings
Affirm is a fintech company that offers a buy now, pay later (BNPL) solution for shoppers and retailers. It is one of the top three players globally in the BNPL space. As you may or may not know, the firm was created by Max Levchin, one of the co-founders of PayPal. The stock has been in free fall since hitting a $139 peak in February. While a big part of the plummet is due to investor sentiment, there are also fundamental concerns that could deter investors from diving right in.
Affirm’s core business is lending money to customers to make purchases. The level of credit checks involved is likely less than what traditional banks do for credit card applications. That simply means Affirm’s default risk can be higher. From its third-quarter results, revenue and gross merchandise volume came in 67% and 83% higher respectively.
While these numbers are impressive, the company also increased its net loss from $85 million in fiscal Q3 2020 to $247 million in the fiscal Q3 2021 just ended. If you ask me, AFRM stock is possibly the best publicly traded pure-play on BNPL. And it would undoubtedly make a growing presence in the payments space. The question is, would you be willing to bet on AFRM stock?
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Afterpay
Australian BNPL giant Afterpay, which has a market cap of about $20.5 billion, operates a very similar merchant-integrated business model to Affirm Holdings. The major difference is that it charges its fees to the merchant and not the consumer, with the exception of late payment fees. With the company promising continued international expansion and hoping for explosive levels of growth, could Afterpay’s share price be a bargain at its current valuation?
Similar to Affirm, Afterpay stocks have also been struggling recently in the wake of broader market volatility. But the company rebounded strongly on Thursday’s trading. This came after a positive commentary from Macquarie. In particular, the bank has upgraded Afterpay to an ‘outperform’ rating and issued a new price target. Considering the upgrade from Macquarie, could now be a good time to buy Afterpay stock?
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PayPal
PayPal is a leading financial technology firm and is one of the most popular online payment services globally. In detail, the company operates as a payment processor for online vendors, auction sites, and many other commercial users. By leveraging technology to make financial services and commerce more convenient, it serves over 300 million consumers and merchants all over the world.
It is noteworthy that the company recently posted its strongest ever first-quarter results. From the fiscal report, the company posted revenue of $6.03 billion, which beat analysts’ expectations. First-quarter net profit rose to $1.10 billion from $84 million a year earlier. Besides, the company added 14.5 million net new active accounts, bringing its total user base to 392 million.
In recent news, the company announced plans of acquiring Happy Returns, an online product-returns provider. In detail, Happy Returns works with retail brands to allow customers to visit “return bars” to return online purchases without having to box and ship items themselves. This would improve PayPal’s platform and expand its footprint, all to provide customers with a more seamless way to make and process returns. With strong fundamentals and a dominant industry position, is PYPL stock a buy and never sell investment?
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Paysafe
Paysafe is a leading specialized payments company. Its core purpose is to enable businesses and consumers to connect and transact seamlessly. Recently, PSFE stock received a boost after David Tepper initiated a new position in the stock. Considering Tepper’s investment track record in value and growth companies, it appears investors are following Tepper’s move.
Recently, the company reported its first-quarter financials for 2021. In it, revenue came in 5% higher year-over-year to $377.4 million. More notably, the company saw a 66% revenue growth in the North American iGaming market. In addition, its total payment volume was $27.7 billion, an increase of 8% from a year ago.
You may have come across Paysafe as a pioneer in digital commerce. That’s right, but there’s also the iGaming sector that has growth investors salivating over. And it is these two sectors that are expecting rapid growth in the coming decade. Looking forward, Paysafe projects a CAGR of 11% from fiscal 2020 to 2023. Revenues and EBITDA are projected to reach $1.88 billion and $660 million by 2023, respectively. It is also worth mentioning that the company has notable clients including Amazon’s (NASDAQ: AMZN) Twitch and Bet365. With many major clients under its belt and Tepper on board, is now the time for investors to invest in PSFE stock for the long haul?
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Visa
Visa is a payments technology company that connects its users through electronic payments. The company enables global commerce through the transfer of value and information among participants. From the company’s latest fiscal report, Visa posted revenue of $5.73 billion and net income of $3.0 billion. In addition, the company saw payment volume grow 11% in the quarter. This goes to show that recovery is well underway after the pandemic has impacted spending trends, especially with international travel largely stalled.
Recently, Visa and Wave, an accounting and business banking platform for small businesses, announced the Canadian launch of Instant Payouts, Wave’s cash flow payments solution for small business owners. This feature integrates Visa Direct directly into Wave’s invoicing and payments platform. Hence, it allows customers a new way to access the money they’ve earned within seconds. Rather than waiting for the typical payment processing times, Wave customers can receive funds in real-time. With such exciting development, would you consider investing in V stock as the economy reopens?
