11 Best Digital Payments Stocks To Buy Now

In this article, we discuss 11 best digital payments stocks to buy now.

Digital money transactions are rising swiftly in emerging markets as innovations increase. Banks, fintechs, and telecom companies must rapidly create strategies to take up market share. Digital payment transactions have grown quickly in emerging markets in the last two years, and the COVID-19 pandemic helped the transition to digital payments and e-commerce. 

People leaned more towards e-wallets, online payments, direct bank transfers, and companies partnered with digital money providers to extend their customer base during the peak pandemic years. Africa and Southeast Asia saw the fastest acceleration in digital payments, as these regions have lesser banking access, which leaves higher potential to tap into underserved populations. Another significant development of the pandemic years has been the popularity of “buy now, pay later”, a type of short-term credit used by companies which enables consumers to divide payments into installments.

On November 24, Rodney Bain, co-founder and US president of payments fintech Apexx Global, told Financial Times: 

“The pandemic had a profound effect on digital payments, driven by two key factors. The fundamental inability for consumers to make in-store transactions during lockdowns and general discomfort with exposure to physical environments; and the economical strain felt by consumers during the pandemic.” 

Some of the best digital payments stocks to invest in include Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and PayPal Holdings, Inc. (NASDAQ:PYPL). 

Our Methodology 

We selected the following digital money stocks based on positive analyst coverage, strong business fundamentals, and future growth prospects. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. 

Pachai Leknettip/Shutterstock.com

Best Digital Payments Stocks To Buy Now

11. Futu Holdings Limited (NASDAQ:FUTU)

Number of Hedge Fund Holders: 14

Futu Holdings Limited (NASDAQ:FUTU) is a Hong Kong-based company that operates an online brokerage and wealth management platform in Hong Kong and internationally. The company offers trading, clearing, settlement services, margin financing, securities lending services, and stock yield enhancement programs. 

On November 21, the company reported a Q3 GAAP EPADS of $0.68, beating market estimates by $0.07. The revenue of $247.9 million also outperformed Wall Street estimates by $19.75 million. Futu Holdings Limited (NASDAQ:FUTU)’s total number of paying clients increased 23.8% year-over-year to 1,444,955 as of September 30, 2022.

Investment advisory DBS Bank initiated coverage of Futu Holdings Limited (NASDAQ:FUTU) on October 24 with a Buy rating and a $55 price target.

Among the hedge funds tracked by Insider Monkey, 14 funds reported owning stakes worth $113.3 million in Futu Holdings Limited (NASDAQ:FUTU) at the end of Q3 2022, compared to 9 funds in the prior quarter worth $153.2 million. Israel Englander’s Millennium Management is the largest stakeholder of the company, with 1.3 million shares valued at $49 million. 

Like Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and PayPal Holdings, Inc. (NASDAQ:PYPL), Futu Holdings Limited (NASDAQ:FUTU) is one of the best  digital money stocks to invest in. 

Here is what Tao Value has to say about Futu Holdings Limited (NASDAQ:FUTU) in their Q1 2021 investor letter:

“Futu is a new “Opportunistic” position. It is an HK based online brokerage & wealth management platform with deep roots in technology. Futu sits in the confluence of 3 strong favorable forces of Meteorology, Topography & Commander, yet was underpriced at the time of our entry. In terms of Meteorology, there is a huge addressable market of Chinese domestic middle to upper classes’ wealth being deployed to overseas assets allocation in the next decade. Additionally, the incumbents being disrupted are extremely weak in their digital transformation. On Topography, Futu’s user-centric product design built an intuitive front end and great user experience, while the digital native development framework built a solid & reliable back end (including a self-developed order routing & execution system for the HK market). This is a rare combination compared to both offline incumbents (who lack flashy front end & UX) & other new online disrupters (who lack solid infrastructure). On Commander factor, founder CEO Li Hua was a Tencent engineer in its early days with deep knowledge in product design and development. Li is said to be a fanatic product manager, to this day still at the front-line, alpha testing any new features. Based on analyses of these factors, I think Futu could compound its revenue at a very high rate with very high certainty and with strong operating leverage, putting our entry price very attractive compared to earning power in 3-5 years. Yet just as we finished building a small position, the price started to take off and more than tripled in a month. When such price action happens, it is obvious that Mr. Market has turned very euphoric to this name. I decided to trim but kept a reasonable position given its growth certainty.”

10. Green Dot Corporation (NYSE:GDOT)

Number of Hedge Fund Holders: 22

Green Dot Corporation (NYSE:GDOT) is a Texas-based financial technology and bank holding company that provides financial products to consumers and businesses in the United States. It operates through three segments – Consumer Services, Business to Business Services, and Money Movement Services. It is one of the best digital money stocks to monitor. 

On November 9, Green Dot Corporation (NYSE:GDOT) reported a Q3 non-GAAP EPS of $0.44 and a revenue of $337.2 million, outperforming Wall Street estimates by $0.09 and $7.19 million, respectively. The company sees year-over-year growth in revenue per account and positive trends in its GO2bank product. 

Barclays analyst Ramsey El-Assal on November 14 maintained an Equal Weight rating on Green Dot Corporation (NYSE:GDOT) but trimmed the price target on the shares to $21 from $25 following the Q3 earnings.

According to Insider Monkey’s Q3 data, 22 hedge funds were long Green Dot Corporation (NYSE:GDOT), compared to 26 funds in the prior quarter. Jeffrey Smith’s Starboard Value LP is the largest position holder in the company, with 5.3 million shares worth $100.5 million. 

Here is what Steel City Capital has to say about Green Dot Corporation (NYSE:GDOT) in its Q4 2021 investor letter:

“The Partnership recently established new positions in Green Dot (GDOT). As for GDOT, the company is a collection of old-school money access/money movement operations as well as new-school “FinTech” offerings. It is perhaps best known as the banking partner behind Wal-Mart’s prepaid MoneyCard debit card. Prepaid debt is among the least sexy financial service offerings in the market and I also suspect there’s a degree of snobbery among the investing class that its primary customers sit on a lower socio-economic rung. I think these factors are contributing to today’s opportunity.

One of the emerging trends in the “FinTech” space is integration of banking and payment services by consumer facing companies. The idea is that by integrating these services, companies can collect more data on spending patterns, drive a “stickier” customer relationship/brand loyalty, and ultimately drive more sales. At the same time, such consumer facing companies either can’t, or won’t, build out these platforms on their own. Doing so would require, among other things, 1) a specific degree of technological expertise and 2) ownership and control of a banking institution. The latter of the two factors – owning a banking charter – is a significant deterrent to “going it alone.” Owning a bank requires costly and time consuming compliance (AML/KYC, etc.) and ongoing regulatory scrutiny. Over the years, a long list of household names with financial services ambitions (including Wal-Mart) have either tried and failed, or proactively decided against owning and operating a bank. This is where someone like GDOT comes in, supplying the technical know-how and offering use of their banking charter without the headaches of actually becoming a regulated bank. In industry parlance, this has come to be known as “Banking-as-a-Service” or BaaS, for short.

GDOT’s relationship with Wal-Mart has shifted more in the direction of BaaS than “just” prepaid debit with WalMart last year converting all of their existing prepaid accounts to demand deposit accounts intended to function similarly to a traditional banking account. MoneyCard now comes complete with an app and various features like overdraft protection, early payday, and cashback on Wal-Mart purchases. Beyond Wal-Mart, GDOT has expanded its BaaS offerings with other large brands. Another interesting use case is its Partnership with Intuit’s QuickBooks. When you open a new QuickBooks business account, you’re given the option to open a QuickBooks branded business checking account at the same time, which is powered on the back-end by GDOT. There’s a lot of white space out there for GDOT to work with additional consumer facing companies to integrate payments and other banking services into their platforms. I’ll acknowledge that GDOT is far from the only “player” in the arena, but the mere fact that they’ve already bagged a number of large name clients on the BaaS side (Intuit/QuickBooks, Apple/Apple Cash, Uber/Uber Checking) at least suggests their capabilities and offerings have passed an intense amount of scrutiny…” (Click here to see the full text)

9. Affirm Holdings, Inc. (NASDAQ:AFRM)

Number of Hedge Fund Holders: 26

Affirm Holdings, Inc. (NASDAQ:AFRM) is a California-based company that provides a platform for digital and mobile-first commerce in the United States, Canada, and internationally. The company’s platform includes point-of-sale payment solutions for consumers, merchant commerce solutions, and a consumer-focused app. Affirm Holdings, Inc. (NASDAQ:AFRM)’s revenue of $361.62 million grew 34.2% year-over-year, beating Wall Street estimates by $1.15 million.

On November 10, DA Davidson analyst Christopher Brendler reiterated a Buy rating on Affirm Holdings, Inc. (NASDAQ:AFRM) but lowered the price target on the shares to $32 from $50 after its FQ1 results and updated guidance. The company reported a solid quarter against increasing macro headwinds and while the stock sold off, he is not worried as underlying trends suggest Affirm Holdings, Inc. (NASDAQ:AFRM) continues to significantly outperform peers, the analyst wrote in a research note.

According to Insider Monkey’s data, 26 hedge funds were bullish on Affirm Holdings, Inc. (NASDAQ:AFRM) at the end of September 2022, compared to 27 funds in the prior quarter. Colin Moran’s Abdiel Capital Advisors is a prominent stakeholder of the company, with 2.16 million shares worth $40.7 million. 

Here is what Bireme Capital specifically said about Affirm Holdings, Inc. (NASDAQ:AFRM) in its Q2 2022 investor letter: 

“We recently covered our short position in Affirm Holdings, Inc. (NASDAQ:AFRM) after a rapid decline brought the share price to ~$30 – down from our entry point above $100 – in only 7 months. We discussed Affirm in our Q4 letter, saying the following:

Affirm is a “Buy Now, Pay Later” (BNPL) company founded by former PayPal CTO and cofounder Max Levchin. They provide installment loans to consumers, partnering with retail companies looking to drive higher sales. They have two primary products: a zero-fee installment loan for consumers with the best credit scores, and a more traditional product with 20%+ interest rates for subprime borrowers. Their stated plan is to disrupt the credit industry with more transparent, lower-fee loans. At a roughly $28b market cap at the start of 2022, AFRM stock was priced at more than 20x trailing sales, a steep price for a money-losing lender. While their early lead in online BNPL transactions and partnerships with fast-growing retailers like Peloton has fueled significant historical growth, a wave of competition has arrived… While the stock has already fallen sharply from where we initiated our short position, we think it could fall another ~40% to trade at 8x FY2022 sales.

Interestingly, not much has changed about Affirm’s business from when it sported a $28b market cap. Estimates for 2022 sales have been inching up, from $1.25b at the start of the year to $1.35b today. And analysts estimate that the company will lose about $150m of EBITDA this year, slightly better than estimates in January. Rather than a story of deteriorating business fundamentals, this was a story of market participants simply deciding that a fast-growing, money-losing subprime lender – even a disruptive one – with around $1b of revenues should not be worth twenty-eight billion dollars. We think the current valuation is much more reasonable, and we do believe that Affirm will eventually generate profits from its lending platform, so we covered our short position.”

8. Fiserv, Inc. (NASDAQ:FISV)

Number of Hedge Fund Holders: 59

Fiserv, Inc. (NASDAQ:FISV) is a Wisconsin-based company that provides payment and financial services technology worldwide. The company operates through Acceptance, Fintech, and Payments segments. It is one of the best digital money stocks to consider buying. Fiserv, Inc. (NASDAQ:FISV) raised its full-year 2022 outlook and now expects organic revenue growth of 11% and adjusted earnings per share of $6.48 to $6.55, representing growth of 16% to 17% from its prior view of $6.45 to $6.55. The consensus adjusted EPS came in at $6.48. 

On October 28, Citi analyst Ashwin Shirvaikar maintained a Buy recommendation on Fiserv, Inc. (NASDAQ:FISV) but trimmed the firm’s price target on the shares to $115 from $122 following the “mixed” third quarter.

According to Insider Monkey’s Q3 data, Fiserv, Inc. (NASDAQ:FISV) was part of 59 hedge fund portfolios, with collective stakes worth approximately $4 billion. Harris Associates held the leading stake in the company, consisting of 21.3 million shares worth $2 billion. 

Artisan Partners made the following comment about Fiserv, Inc. (NASDAQ:FISV) in its Q3 2022 investor letter:

“While our list of potential candidates is filling up, we are being patient. We added two new positions in Q3: Fiserv, Inc. (NASDAQ:FISV) and Heineken. Fiserv is a provider of financial technology, core processing and payment processing services to financial institutions and merchants. The company reports three segments: acceptance (merchant acquiring), payments & networks (issuer processing and debit network), and fintech (core bank processing). Fiserv has strong market positions and scale across these businesses, but competitive intensity varies. In the acceptance segment, Fiserv owns Clover, a high-growth point-of-sale (POS) system forsmall and medium businesses, with similar annualized gross payment volume to Block’s Square. However, Fiserv is receiving little credit for Clover. The market is overly concerned about the competitive nature of merchant acquiring and legacy processors losing market share to new entrants. We believe Fiserv’s business is more resilient and will continue to grow in the medium term driven by its scale and Clover. Moreover, fintech and payments are good businesses that are undervalued by the market. Both businesses are in highly consolidated industries where scale advantages are critical, and revenues are sticky due to high switching costs. A high share of recurring revenue and profit, an attractive margin profile and high free cash flow conversion are characteristics that should provide downside protection, in our view. We started our position with shares selling for about 11X normalized operating profit. That is a below-average multiple for an above-average business.”

7. Fidelity National Information Services, Inc. (NYSE:FIS)

Number of Hedge Fund Holders: 60

Fidelity National Information Services, Inc. (NYSE:FIS) is a Florida-based company that provides technology solutions for merchants, banks, and capital markets firms worldwide. It operates through Merchant Solutions, Banking Solutions, and Capital Market Solutions segments. On October 20, Fidelity National Information Services, Inc. (NYSE:FIS) declared a $0.47 per share quarterly dividend, in line with previous. The dividend is payable on December 23, to shareholders of record on December 9. 

On November 25, Mizuho analyst Dan Dolev maintained a Buy recommendation on Fidelity National Information Services, Inc. (NYSE:FIS) but trimmed the price target on the shares to $90 from $105. The company’s Q3 results were disappointing, but management’s focus on cost-cutting can help improve sentiment, the analyst told investors in a research note. 

According to Insider Monkey’s data, 60 hedge funds were bullish on Fidelity National Information Services, Inc. (NYSE:FIS) at the end of Q3 2022, compared to 67 funds in the prior quarter. Select Equity Group is the leading position holder in the company, with 5.8 million shares worth $443.5 million. 

ClearBridge Investments made the following comment about Fidelity National Information Services, Inc. (NYSE:FIS) in its Q3 2022 investor letter:

“We also sold out of payments and financial software maker Fidelity National Information Services, Inc. (NYSE:FIS), choosing to concentrate our digital payments exposure in PayPal (PYPL), which we believe has a more attractive risk/reward at these levels and more internal levers to generate returns. We bought FIS in 2019 for its mix of offense and defense with banking software and services as a stable business and payments that could keep up with fintech. The shares outperformed the benchmark up to the sale, illustrating the resiliency of the core business; however, FIS has underperformed higher-growth payment names.”

6. American Express Company (NYSE:AXP)

Number of Hedge Fund Holders: 68

American Express Company (NYSE:AXP) is a New York-based company that provides charge and credit payment card products worldwide. American Express Company (NYSE:AXP) is one of the leading digital money stocks to invest in. On November 21, UBS analyst Erika Najarian initiated coverage of American Express Company (NYSE:AXP) with a Neutral rating and a $168 price target as part of a broader research note on U.S. Consumer & Specialty Finance names. 

According to Insider Monkey’s third quarter database, 68 hedge funds reported owning stakes worth $24.8 billion in American Express Company (NYSE:AXP), compared to 67 funds in the prior quarter worth $25.2 billion. Warren Buffett’s Berkshire Hathaway is the biggest position holder in the company, with 151.6 million shares valued at $20.45 billion. 

In addition to Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and PayPal Holdings, Inc. (NASDAQ:PYPL), American Express Company (NYSE:AXP) is one of the best digital money stocks favored by smart investors. 

In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and American Express Company (NYSE:AXP) was one of them. Here is what the fund said:

“In financials, American Express Company (NYSE:AXP) has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”

5. Block, Inc. (NYSE:SQ)

Number of Hedge Fund Holders: 75

Block, Inc. (NYSE:SQ) is a California-based company that creates tools enabling sellers to accept card payments, reporting and analytics, and next-day settlement. Block, Inc. (NYSE:SQ) is one of the best digital money stocks to invest in. On November 3, Block, Inc. (NYSE:SQ) reported a Q3 non-GAAP EPS of $0.42 and a revenue of $4.52 billion, outperforming Wall Street forecasts by $0.19 and $50 million, respectively. Revenue over the period climbed 17.7% year-over-year. 

On November 16, Mizuho analyst Dan Dolev raised the price target on Block, Inc. (NYSE:SQ) to $69 from $57 and maintained a Neutral rating on the shares. The analyst said payday lending is largely meaningful to Cash App gross profit growth. Payday lending is a short-term boost to inflows, but it may ultimately pressure Block, Inc. (NYSE:SQ)’s multiple as delinquencies across consumer lending continue to grow, the analyst wrote in a research note. 

According to Insider Monkey’s Q3 data, 75 hedge funds were bullish on Block, Inc. (NYSE:SQ), compared to 72 funds in the prior quarter. Cathie Wood’s ARK Investment Management is the largest position holder in the company, with 9.2 million shares worth $505.45 million. 

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Block, Inc. (NYSE:SQ) was one of them. Here is what the fund said:

“Block, Inc. (NYSE:SQ) provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. Shares fell due to mixed quarterly results with more modest growth in the Seller business offsetting strength in Cash App. While integration of recently acquired Afterpay is progressing well and credit metrics remain healthy, the buy-now-pay-later business slowed due to greater competitive intensity. We continue to own the stock due to Block’s long runway for growth, sustainable competitive advantages, and unique corporate culture.”

Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund include Wells Fargo.”

4. MercadoLibre, Inc. (NASDAQ:MELI)

Number of Hedge Fund Holders: 81

MercadoLibre, Inc. (NASDAQ:MELI) operates online commerce platforms in Latin America. It offers the Mercado Pago FinTech platform, a financial technology platform that facilitates transactions at its marketplaces, allowing its users to send and receive payments online, as well as transfer money through websites or apps. MercadoLibre, Inc. (NASDAQ:MELI) is one of the best digital money stocks to monitor. 

On November 3, Citi analyst Joao Pedro Soares maintained a Buy rating on MercadoLibre, Inc. (NASDAQ:MELI) but lowered the price target on MercadoLibre to $1,050 from $1,150 ahead of the Q3 results. The analyst continues to see MercadoLibre as the “best vehicle to be positioned in secular e-commerce growth” in Latin America. His only concern is the rising competition with Amazon in the long-run.

According to Insider Monkey’s Q3 data, 81 hedge funds were bullish on MercadoLibre, Inc. (NASDAQ:MELI), compared to 68 funds in the earlier quarter. David Blood and Al Gore’s Generation Investment Management is the largest stakeholder of the company, with 683,206 shares worth $565.5 million. 

SaltLight Capital made the following comment about MercadoLibre, Inc. (NASDAQ:MELI) in its Q3 2022 investor letter:

“Despite the economic slowdown in developed markets, our Latin American investment in MercadoLibre, Inc. (NASDAQ:MELI) had another outstanding third quarter growing revenues by 61% on a USD FX-neutral basis (GMV +32% FXN). Despite this strong growth, it also managed to expand operating profit margins to 11% (compare this to Amazon which is struggling to make a profit in its retail business).

LatAm’s e-commerce penetration is still very low compared to Asia and developed markets. MELI is mostly a marketplace but has also adopted models from elsewhere. In the recent past, it has built 3rd party seller infrastructure that has made Amazon so successful, and it is also heavily investing in a mobile based fintech infrastructure very similar to ANT Group in China. After only launching a couple of quarters ago, their advertising business is already at 1.3% of Gross Merchandise Value.”

3. PayPal Holdings, Inc. (NASDAQ:PYPL)

Number of Hedge Fund Holders: 126

PayPal Holdings, Inc. (NASDAQ:PYPL) is a California-based company operating a technology platform that enables digital payments for merchants and consumers worldwide. It provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. On November 3, PayPal Holdings, Inc. (NASDAQ:PYPL) reported a Q3 non-GAAP EPS of $1.08 and a revenue of $6.85 billion, topping Wall Street estimates by $0.12 and $30 million, respectively. The company expects FY23 non-GAAP EPS growth of at least 15%.

On November 7, DA Davidson analyst Christopher Brendler reaffirmed a Buy rating on PayPal Holdings, Inc. (NASDAQ:PYPL) but cut the price target on the shares to $110 from $120. PayPal Holdings, Inc. (NASDAQ:PYPL)’s Q3 results were a “step back” after a positive performance in Q2 as multiple primary underlying metrics deteriorated, the analyst told investors. However, he added that PayPal Holdings, Inc. (NASDAQ:PYPL) has “made real progress” on expenses and “credit looks great”, with buy-now-pay-later business outperforming.

According to Insider Monkey’s data, 126 hedge funds were long PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of the third quarter of 2022, compared to 97 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with 17.6 million shares worth $1.5 billion.  

Here is what RiverPark Large Growth Fund has to say about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q3 2022 investor letter:

“PayPal, announced better-than-expected 2Q results, positive guidance (including more than $1.3 billion of 2023 cost savings leading to operating margin expansion), a $15 billion stock repurchase program, and the appointment of Blake Jorgensen as CFO, who was previously the well-regarded CFO at Electronic Arts. The company reported 9% revenue growth, in-line with guidance, and $0.93 EPS, exceeding guidance due to robust operating leverage. Management narrowed its 2022 revenue guidance from 11%-13% growth to about 11% growth due to the macro environment but raised its EPS guidance due to greater operating margin leverage and share buybacks. The stock also reacted to the news that activist investor Elliott Management had taken a stake in the company. PYPL operates at significantly lower margins than its payment competitors Visa and Mastercard, and sources suggest that Elliott intends, among other things, to push for the company to improve its margins and drive higher cash flow growth in the near term.

PayPal provides direct exposure to the secular growth in ecommerce-driven digital payments as it is the most accepted digital wallet on-line. More than 3/4 of the 1,500 largest online retailers across North America and Europe accept PayPal, which is almost triple the acceptance of Apple Pay, the number two digital wallet. PayPal is also a key beneficiary of the current dramatic shift in consumer buying habits brought on by the pandemic, as well as the relatively newer consumer-to-consumer payment trends through its Venmo peer-to-peer (P2P) payment service. With a 2Q non-GAAP operating margin of 19%, PYPL also has significant margin expansion potential given that competitors Adyen, Visa and Mastercard have 50%-65% operating margins. We believe the combination of the secular growth of eCommerce and P2P payments, along with expanding operating leverage and the strategic use of the company’s significant and growing cash balance should fuel a mid-20% earnings growth rate over the next five years. This, to us, presents an excellent risk/reward profile given that PYPL trades at a modest premium to the market multiple and a 6% 2023 FCF yield.”

2. Mastercard Incorporated (NYSE:MA)

Number of Hedge Fund Holders: 146

Mastercard Incorporated (NYSE:MA) is one of the premier digital money stocks to invest in. On October 27, Mastercard Incorporated (NYSE:MA) reported a Q3 non-GAAP EPS of $2.68 and a revenue of $5.8 billion, outperforming Wall Street estimates by $0.10 and $140 million, respectively. Net revenue increased 15%, or 23% on a constant currency basis, which includes a 1 percentage point benefit from acquisitions. 

On November 1, Mizuho analyst Dan Dolev maintained a Buy recommendation on Mastercard Incorporated (NYSE:MA) but lowered the firm’s price target on the shares to $380 from $385 following the Q3 results. The analyst raised 2022 estimates but trimmed outer-year expectations.

According to the third quarter database of Insider Monkey, Mastercard Incorporated (NYSE:MA) was part of 146 public stock portfolios, compared to 137 in the preceding quarter. Charles Akre’s Akre Capital Management is the largest position holder in the company, with nearly 6 million shares worth $1.6 billion. 

Here is what L1 Capital International specifically said about Mastercard Incorporated (NYSE:MA) in its Q2 2022 investor letter:

“Growth in electronic payments, the continued shift away from cash and cheques, and the provision of additional services such as fraud identification and prevention continue to power Mastercard Incorporated (NYSE:MA)’s growth (Figure 14). In person cross-border transactions are recovering alongside normalization of travel.

Mastercard and Visa (we have invested in both) continue to dominate the electronic payments industry outside of China, utilizing their own multi-faceted networks as well as Government and third-party payments infrastructure to facilitate transactions. Another perfect example of a ‘Noah’s Ark’ industry structure.

Regulation, technological disruption and disintermediation, and geopolitical constraints are perennial issues for consideration, but Mastercard (and Visa) management have repeatedly demonstrated their ability to manage these issues…” (Click here to read the full text)

1. Visa Inc. (NYSE:V)

Number of Hedge Fund Holders: 165

Visa Inc. (NYSE:V) is one of the best digital money stocks favored by elite hedge funds. On November 25, Visa Inc. (NYSE:V) announced that its U.S. payments volume in November rose 9% from a year ago, even after the company concluded its operations in Russia in March 2022. Global processed transactions increased 10% year-over-year and were 140% of the 2019 levels in November.

On October 27, investment advisory Barclays maintained an Overweight rating on Visa Inc. (NYSE:V) but lowered the firm’s price target on the shares to $264 from $271 following the Q3 results. Analyst Ramsey El-Assal issued the ratings update.

According to Insider Monkey’s data, 165 hedge funds were bullish on Visa Inc. (NYSE:V) at the end of September 2022, compared to 166 funds in the prior quarter. Chris Hohn’s TCI Fund Management is the largest position holder in the company, with approximately 20 million shares worth $3.5 billion. 

Baron Funds made the following comment about Visa Inc. (NYSE:V) in its Q3 2022 investor letter:

“Shares of global payment network Visa Inc. (NYSE:V) fell despite reporting financial results that beat Street forecasts and sustained volume growth in recent months. Revenue grew 19% and EPS grew 33% in the most recent quarter, and double-digit payment volume growth persisted through August. Share price weakness represented a reversal of outperformance earlier this year and may be due to foreign exchange headwinds and concerns about a potential weakening of consumer spending. We continue to own the stock due to Visa’s long runway for growth and significant competitive advantages.”

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Disclosure: None. 11 Best Digital Payments Stocks To Buy Now is originally published on Insider Monkey.