We recently compiled a list of the 10 Best Fintech Stocks To Buy in 2024. In this article, we are going to take a look at where Fiserv, Inc. (NYSE:FI) stands against the other fintech stocks.
A Breakdown of the Global Fintech Industry
Based on a collaboration between the World Economic Forum and the Cambridge Centre for Alternative Finance, a report revealed that the global fintech industry has been strong post-pandemic with the average global customer growth rates above 50% from 2021 to 2022. In this growing market, fintechs are bringing tailored financial services and products to underserved segments of the population. These segments make up a sizeable portion of the consumer base of fintech firms operating in both advanced economies and in emerging markets and developing economies.
For the second year in a row as reported by CNBC, payments serve as the largest individual industry segment with a 24% share, although it is really fragmented with many firms moving money across the globe. Alternate finance which encompasses crowd-funding apps and online lenders follows with a 16% share. Other segments and their relative shares include 14% of neo-banking, 12% of wealth technology, 10% of business process solutions, 10% of banking solutions, 8% of financial planning, and 6% of digital assets. Country-wise, the US serves as the single biggest fintech market which hosts 46% of the top 250 fintech companies. Meanwhile, the UK hosts 12% while India is home to 4% of these companies. India has replaced both Germany and France due to its rapidly increasing digital adoption.
Current Landscape for Fintechs
In the prevailing industry landscape, fintech companies that are on the lower end appear to be better off. Previously, Bank of America’s CEO mentioned the consumer to be very stable and not getting worse. On the contrary, JP Morgan Chase COO Daniel Pinto warned that net interest income is going to be challenging next year with the expected Fed rate cuts just on the horizon. Ally Financial CFO talked about worse conditions as its borrowers are facing job market weakness as an increasing concern other than inflation.
In an interview with CNBC, Dan Dolev, senior analyst in fintech equity research at Mizuho, emphasized the rising consumer credit concerns. In his opinion, the fintech players with more exposure to the lower income consumers are doing better. He mentioned that low-end consumers had a lot of steamy money that they spent beyond their means. These consumers have pulled back on their spending to pay back their loans after depleting their savings 6 or 12 months ago. Meanwhile, the prime consumers are now facing the same pressure subprime consumers faced several months ago.
Our Methodology:
In order to compile a list of the 10 best fintech stocks to buy in 2024, we first used stock screeners and relevant ETFs to make an extended list of the relevant companies with the highest market caps. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best fintech stocks to buy in 2024 have been arranged in ascending order of their hedge fund holders, as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Fiserv, Inc. (NYSE:FI)
Number of Hedge Fund Holders: 73
Fiserv, Inc. (NYSE:FI) serves as a leading global provider of payments and financial services technology solutions. The firm enables money movement for financial institutions, people, and businesses. It was in 1984 that First Data Processing and Sunshine State Systems merged together to create a national data processing organization focused on the financial services industry, Fiserv. The company went public in 1986 and has grown over the years to become a Fortune 500 company. The company’s reportable segments include Merchant Solutions and Financial Solutions.
With more than 6 million merchant locations globally and over 25,000 financial transactions per second at peak, Fiserv, Inc. (NYSE:FI) has 40 years of experience in fintech and payments leadership. Through its integrated solutions, strong client franchise, and strategic positioning, the industry leadership position remains strong. This is evident from another year of double-digit organic revenue and adjusted earnings per share growth for Fiserv. The global growth just doesn’t stop here as the firm recently went live with its pilot merchant acquiring services in its new market New Zealand and continued to grow its instant payment transactions in Brazil and Argentina.
The firm delivered strong performance across the business in the year’s second quarter. With 6% growth in the Financial Solutions segment and 9% growth in the Merchant Solutions segment, the fintech recorded a 7% year-over-year rise in its adjusted revenue. Adjusted earnings per share also grew in the second quarter and in the first six months of 2024 as compared to the prior year periods. Thus, the company raised its full-year 2024 adjusted earnings per share outlook based on a strong first half of the year. Other highlights from the quarter include new clients in verticals such as petro, gaming, government, and healthcare, as well as major wins in the form of a strategic outsourcing agreement with Verizon and a partnership with Apple to enable new Apple Pay functionality with two of its next-generation solutions.
The stock was held by 73 hedge funds, as of Q2 2024. Harris Associates was the most prominent shareholder in the company. Hence, Fiserv, Inc. (NYSE:FI) is one of the best fintech stocks to buy in 2024.
Overall FI ranks 6th on our list of the best fintech stocks to buy. While we acknowledge the potential of FI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than FI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.