Given that money – and technology – make the world go round, it’s not surprising that the combination can produce some of the most rewarding investments in the world. Here are three great fintech stocks you can buy in bulk, even if you only have $1,000 to work with.
Even if you’ve never heard of it Bill Holdings(NYSE: BILL)there is a good chance that your employer has that. Bill offers a range of accounting software to businesses of all shapes and sizes.
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It’s a seemingly crowded market dominated by brands like QuickBooks, NetSuite, and ZipBooks. However, Bill is still a standout in this field. The software was built from the ground up to meet the unique needs of accounts receivable and accounts payable departments, accounting firms and regulators who just want to keep a handle on employee spending. The company makes money from this cloud-based technology by charging a subscription fee to access it, or by charging a small fee for each processed payment it facilitates.
Last quarter’s revenue rose 18% year over year, continuing the company’s established revenue progress.
BILL Earnings data (quarterly) according to YCharts
We can’t ignore the fact that Bill’s revenue growth is slowing. The revenue retention rate is also declining, from better than 100% just a few years ago to just 92% at the end of fiscal 2024 on June 30. It means that at least some customers will discontinue their service, or at least use its technology. fewer. This slowdown could also be the result of economic headwinds forcing small businesses to cut costs wherever and whenever they can. At the very least, Bill should actively address both challenges, while sharing his plans with shareholders on how he does so.
Just keep things in perspective. This company’s rapid growth phase in 2022 and 2023 was not exactly sustainable given the way it was managed. While revenue growth may be slowing now, profit margins are expanding faster because revenue has grown much faster than expenses. This new standard will allow for higher margin operations, giving Bill Holdings the fiscal flexibility it needs to address the two challenges mentioned above.
The stock is still relatively expensive by almost any measure. It is also trading slightly above the consensus price target around $82. These could hold the stock back.
The point is that the current stock price and analysts’ collective pessimism reflect more of the past than the plausible future. The more this stock recovers from the big pullback following the pandemic-induced peak in 2021, the more likely the market will price this bright future. Bill’s solutions are what many companies and businesses have been waiting for for a long time.
Given the extent to which consumers have moved many aspects of their lives online (shopping, working, keeping in touch with friends, etc.), it’s no surprise that people are increasingly doing their banking online as well. What may surprise you is the extent to which it has already happened.
Yet there is still much more of this shift to play out.
In its latest look at the data, the American Bankers Association in the United States says a mobile banking app is the most used means of completing banking transactions, with 48% of customers making it the first option. Online banking (via a web browser) is a distant second at 23%. Visits to the branches and telephone conversations are relatively rare.
Connect the dots. Most banking consumers today are self-sufficient, so much so that they rarely – if ever – need any help from a real person.
Enter SoFi technologies(NASDAQ: SOFI).
SoFi was founded in 2011 as a platform aimed at helping consumers better manage student loans and has since evolved into so much more. Current accounts, loans, credit cards, insurance and investments are all in the wheelhouse, with all these services available in a purely online package.
Consumers are increasingly embracing these options. At the end of September, the company had 9.4 million customers, extending a four-year streak of quarterly user growth, compared to 1.5 million customers in the same period of 2020. Sales and earnings before interest, taxes and depreciation and amortization (EBITDA) have grown at an equally rapid rate as these customers sign up for additional products and services once on board. The company posted sustained profits early this year and is expected to continue to grow these profits in the future.
There is certainly much more room for SoFi Technologies to continue this growth rate well into the future. Despite the growth of the online banking industry to date, YouGov reports that only 3 in 10 U.S. consumers currently have an account with an online bank. The remaining 7 are up for grabs. They’ll probably come around soon enough. Market research firm Straits Research predicts that the global online banking business will achieve annual growth of almost 14% through 2030, led by the North American market.
Finally, add American Express(NYSE:AXP) add it to your list of fintech stocks to scoop if you’re currently sitting on an extra $1,000.
It is clearly much better known than Bill Holdings or SoFi Technologies. American Express is of course a credit card name. The payment network processed nearly $1.7 trillion in transactions last year and turned that into $13.5 billion in revenue. There are currently approximately 140 million American Express cards in consumer hands.
The point is that AmEx is different from the better known credit card payment networks MasterCard And Visa. It is much more accurate to view American Express as a credit card provider as well as a payment network platform combined in a way that creates a powerful, revenue-bearing credit card ecosystem.
Think about it. While almost every credit card offers certain benefits, few compare to those offered to Amex cardholders. Hotel stay credits, cash back on groceries, discounted streaming services, airport lounge access and more are just a few of the reasons people (and businesses) pay as much as $695 a year for an American Express card. Merchants, of course, also pay the company a small fee every time a member uses one of its cards at their location.
It’s also worth noting that Amex tends to attract more affluent consumers, who may not be as negatively affected by economic downturns as the average consumer at times. That’s at least part of the reason the company has now reported fourteen straight quarters of revenue growth, emerging from the pandemic-induced crisis in impressive fashion.
The future is also bright. Millennials and Gen Z are especially big fans, accounting for about a third of the company’s payment volume and the vast majority of new cardholders last quarter. This under-40 group is already accustomed to membership-based ecosystems such as Amazon Prime and access to Costco‘s shops.
As this group ages and Generation Alpha matures, look for more consumers who are even more willing to pay for Amex’s superior benefits.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. American Express is an advertising partner of Motley Fool Money. James Brumley has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Amazon, Bill Holdings, Costco Wholesale, Mastercard, and Visa. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.
3 No-Brainer Fintech Stocks to Buy Now for Under $1,000 was originally published by The Motley Fool
