2 Fintech Stocks I’d Buy and Hold Forever

High-growth fintech stocks such as Nu and Propel are positioned to deliver outsized gains to shareholders in 2024 and beyond.

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Companies that apply new technology to legacy financial businesses are called fintechs. These companies develop digital products and solutions to attract new-age consumers across the globe. Some of the solutions offered by fintech players include payment processing, digital banking, online investing, and financial software.

The global shift towards the digitization of old-age financial products will continue to act as a massive tailwind for fintech stocks in the upcoming decade, making these disruptors top investment options right now.

Here are two quality fintech stocks you can consider buying today.

Propel Holdings stock

Valued at $583 million by market cap, Propel Holdings (TSX:PRL) stock is trading at all-time highs. The company went public in late 2021 and has since returned over 60% to shareholders. It operates as an online lending platform facilitating access to credit products, including installment loans and lines of credit.

While Propel Holdings is part of the highly cyclical lending industry, it increased revenue by 39% year over year to $83.2 million in the third quarter (Q3). An asset-light model allows Propel to increase profit margins at a much higher rate compared to revenue. For instance, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased by 113% to $18.7 million, while net income surged 123% to $8.5 million in the September quarter.

Propel aims to expand credit access to underserved customers while managing risk and driving sustainable growth through its artificial intelligence-powered technology. The company’s operational results and credit performance, as well as its solid balance sheet, also allowed Propel to increase dividends for the second time in 2023. Propel Holdings currently pays shareholders an annual dividend of $0.48 per share, indicating a forward yield of 2.8%.

Analysts expect Propel to more than double adjusted earnings from $0.77 per share in 2022 to $1.93 per share in 2024. So, priced at nine times forward earnings, the TSX dividend stock is very cheap and is positioned to outpace the broader markets.

Nu Holdings stock

Nu Holdings (NYSE:NU) is among the fastest-growing companies in Latin America. Nu is a digital bank that already dominates the market in Brazil and is gaining massive traction in other countries, including Mexico.

Nu ended 2020 with 33 million customers, and this number rose to 84 million at the end of Q3 of 2023. In this period, Nu’s total payment volume has risen by 282% to US$29 billion.

A widening portfolio of products has enabled Nu to cross-sell and upsell them to existing customers, resulting in higher revenue per active customer. In Q3, Nu emphasized its average revenue per customer grew by 18% while net income stood at US$303 million, a third consecutive profitable quarter for the company.

Valued at a market cap of $49 billion, Nu is a large-cap company. Despite its massive size, it is forecast to increase revenue from US$4.8 billion in 2022 to US$10.7 billion in 2024. Analysts expect adjusted earnings to expand from US$0.04 per share to US$0.41 per share in this period.

Priced at 25 times forward earnings, NU stock trades at a cheap valuation and should deliver outsized gains to shareholders in the next 10 years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Propel. The Motley Fool recommends Nu. The Motley Fool has a disclosure policy.

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