Stock market crashes present opportunities for long-term investors who can handle volatility and paper losses. You only lose money on a stock when you sell it, and some companies stand to reward patient investors who stay strong during the dips.
The fintech industry has many solid performers that have the potential to exceed market returns. Some of these companies have the potential to become trillion-dollar companies, while others can deliver exceptional long-term gains. These are some of the fintech stocks to monitor in case the stock market goes through a sharp correction.
SoFi (SOFI)
SoFi (NASDAQ:SOFI) is a digital bank that offers many of the banking services you can find at traditional banks. It has loans, credit cards, bank accounts, insurance policies, investment accounts and other resources.
SoFi has made several moves to generate more mainstream appeal, such as the naming rights for SoFi Stadium and becoming the official banking partner of the NBA. Those efforts and others helped the company add 585,000 new members in Q4 2023. Financial results were also good. Revenue grew by 35% year-over-year (YoY), while net income came in at $48 million. That’s a big shift from the company’s net loss in the same period last year.
Those realists brought SoFi’s profit margin close to 8%. It’s a big change for the company that could result in a more attractive valuation. SoFi doesn’t have many of the disadvantages common among financial institutions, such as high property taxes from thousands of branches.
Leadership also has a multi-year plan that suggests EPS will reach $0.55 to $0.80 per share in 2026. Even after hitting those benchmarks, SoFi expects to generate 20% to 25% YoY EPS growth beyond 2026. Hitting those milestones can make the stock attractive for long-term investors.
Nu Holdings (NU)
Nu Holdings (NYSE:NU) is a Brazilian digital bank that primarily serves Latin America. Shares have outperformed the market with a 33% year-to-date gain and a 112% increase over the past year.
The fintech firm has been posting steady growth and generated plenty of excitement in its Q4 2023 print. The bank now has 93.9 million customers and grew its customer base by 26% YoY in Q4 2023. The bank also grew its revenue by 66% YoY, while its net income soared from $58.0 million in Q4 2022 to $360.9 million in Q4 2023. Its Gross Profit margin came in at roughly 48%.
High growth across the board in the promising Latin American region suggests the stock can become an attractive long-term pick. Investors should closely monitor this stock for any dips. Shares trade at a 56 P/E ratio, but surging net income makes it easier to justify the valuation. The stock trades at a more reasonable 25-forward P/E ratio.
Visa (V)
Visa (NYSE:V) is a reliable long-term stock due to its vast market share in the credit and debit card industry. Consumers will continue to use their debit and credit cards for rewards, convenience, credit building and other factors.
Visa makes a small percentage from each transaction, and the business model has worked wonders. The fintech firm reported 10% YoY revenue growth and 12% YoY net income growth in the second quarter of fiscal 2024. Cross-border volume was a key contributor that grew by 16% YoY. CEO Ryan McInerney mentioned that consumer spending remained stable in the quarter.
Visa stock has gained about 70% over the past five years, and analysts believe the stock can continue to rise. The average price target suggests a 17% upside from current levels. The highest price target of $340 per share suggests a potential 27% gain. Visa is currently rated as a Strong Buy by 23 analysts.
On this date of publication, Marc Guberti held a long position in SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.