Brightening monetary policy shifts in the US could be a key driver for growth among fintech’s brightest prospects
The third quarter of 2024 has been eventful, to say the least. Following a start to August punctuated by severe global sell-offs, markets have been left reeling.
Now that the recent downturns have proven that tech stocks aren’t immune to vulnerabilities, there’s a fresh emphasis among investors to buy into firms with a more sustainable outlook.
There are many reasons why the burgeoning fintech landscape could take the mantle of Wall Street’s most effective low-risk tech performers in the second half of 2024.
Growing expectations of Federal Reserve rate cuts of 100 basis points over the coming two months will ignite challenger bank lending services. It will also improve consumer confidence in the United States, helping to provide the nation’s most innovative fintech players with an opportunity to showcase their strength.
This would happen on a scale that hasn’t been seen since the emergence of historically high inflation almost three years ago.
Additionally, fintech’s status as a rapidly growing market, which is expected to reach a value of $1.152 trillion by 2032. This represents a compound annual growth rate of 16.5% over the coming eight years, highlights an industry that’s a solid long-term bet for investors.
With this in mind, let’s take a look at some of the fintech industry’s brightest stocks to buy in August 2024:
Nu Holdings (NU)
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At present, it’s hard to find a more exciting fintech stock than that of Nubank’s parent company, Nu Holdings (NYSE:NU). The company is building a massive customer base in Latin America.
Nubank recently surpassed a massive 100 million customers, becoming the first digital banking platform outside of China to reach the milestone.
Unlike some fintech firms, the company is also very profitable. Despite posting a net loss in 2022, Nubank recorded $1 billion in net profit for 2023 on revenues of more than $8 billion.
Nubank’s vast potential was enough for Wall Street guru Warren Buffett to purchase 107 million Nu Holdings shares worth $1.19 billion when the stock went public, and the firm’s innovation pipeline indicates that there could still be more growth on the horizon for the challenger bank.
In July, it was reported that Nubank had enlisted Stocche Forbes Advogados in São Paulo ahead of its acquisition of Hyperplane, a U.S. artificial intelligence startup.
The prospect of Nubank growing its AI capabilities points to a firm keen to secure future growth and out-innovate its fintech rivals, making the stock an essential consideration for investors.
PayPal (PYPL)
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One of Wall Street’s longest-serving fintech players, PayPal (NASDAQ:PYPL) hasn’t experienced exceptional growth in 2024, but the company has been steadily improving its fundamentals ahead of what could be a strong end to the year.
The stock is up 10.30% in the past six months, after briefly falling down, illustrating the level of volatility that PYPL has experienced throughout the year.
Despite recent volatility, PayPal remains buoyant about its prospects for 2024, indicating that outperformance could arrive in the second half of the year.
PayPal raised its 2024 adjusted profit forecast in the wake of its Q2 earnings, citing an 11% surge in payment volumes to $416.81 billion as a key driver for the fresh optimism.
We can also see a strong innovation pipeline for the world-renowned fintech firm, too. August saw PayPal open up its Fastlane guest checkout solution to U.S. businesses, indicating that the platform is actively reducing the friction in the online shopping experience for many consumers.
Block Inc (SQ)
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As a stock that’s largely focused on a cryptocurrency industry that’s recently suffered a significant downturn, Block Inc (NYSE:SQ) has declined to an attractive purchase opportunity for investors in August.
Ending 13.54% lower YTD, Block’s Wall Street struggles aren’t reflected in the firm’s fundamentals, which showed a second-quarter earnings beat per share reaching $0.93, far higher than the $0.76 consensus.
With news of a company restructuring on the way to combat three lingering operational problems, reportedly revolving around “collaboration, craft, and flexibility,” investors can expect more transformative activity coming from Block in the second half of 2024.
Notably, Block CEO Jack Dorsey appears eager to strengthen the fintech firm’s ties with cryptocurrencies like Bitcoin and recently suggested that Block would become Bitcoin’s largest mining chip maker.
Despite recent volatility in the cryptocurrency market, expectations remain buoyant over Bitcoin’s prospects to reach a value of $100k per coin during its current halving cycle.
While the past few days have served as a reminder of how speculative crypto still is, a six-figure Bitcoin could bring significant growth opportunities for Block.
On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.