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Financial stocks continue to deliver returns for investors, since everyone needs to use and manage money.
Sezzle continues to gain market share in the BNPL industry and looks attractive after the recent correction.
Robinhood has multiple high-growth revenue opportunities and continues to attract new investors.
No matter what innovations reach the marketplace, people will exchange money to buy goods and services. Financial institutions and fintech companies make money by simplifying money management for millions of customers while making it easier for them to access extra funds.
Some of the largest banks have moderate growth rates, but some of the up-and-coming fintech stocks could lead to higher returns. Here are two of the top stocks in the financial sector that could deliver long-term returns.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Getty Images.
Sezzle (NASDAQ: SEZL) caters to buy now, pay later (BNPL) customers who want to break up purchases into smaller monthly payments. Its revenue is growing faster than Affirm (NASDAQ: AFRM) and Klarna (NYSE: KLAR), and it also has the best profit margins in the buy now, pay later industry.
The company delivered solid results yet again in Q3, with revenue up by 67% year over year and net income up by 73% year over year. Those numbers indicate Sezzle is quickly gaining market share while expanding its margins. Sezzle wrapped up the quarter with a 22.8% net profit margin.
The extreme bull case for Sezzle is that BNPL gradually replaces credit cards or at least gains considerable market share over the next few years. Sezzle and other BNPL providers are poised to benefit immensely if that happens. The fintech company has almost 3 million active customers.
One of the concerns about BNPL is that it can collapse due to high living costs and strained wallets. That's one of the main reasons Sezzle stock is down by roughly 60% from its all-time high. However, multiple BNPL providers have hinted at high payout rates.
Sezzle's former chief revenue officer Melissa Davis said in 2020 that 95% of Sezzle's customers pay on time. That was a few years ago, but it reflects an ongoing trend. Klarna said that 96% of Black Friday purchasers paid off their BNPL agreements on time or early back in 2023. Klarna also said that 96% of customers paid back their loans on time in Q2 2025.
These numbers contradict concerns of a BNPL bubble. Sezzle has $33.7 million set aside as an allowance for credit losses, which have more than doubled year over year. However, the company continues to add new customers while having enough cash to address this risk if it materializes. If Sezzle keeps reporting high growth rates, it should have no problem reclaiming its all-time high.
Sezzle helps people break purchases into smaller installment payments, and Robinhood (NASDAQ: HOOD) makes it easier for people to invest in various assets. The company revolutionized stock trading with $0 commissions and continued to expand its business.
Robinhood has expanded to crypto, options trading, prediction markets, futures contracts, and other assets. Crypto trading has been a key growth driver for Robinhood, with that part of the business up by more than 300% year over year in the third quarter.
However, Robinhood isn't just a crypto play. Overall revenue more than doubled year over year, as stock and options trading continues to accelerate. All of this trading is lumped in transaction-based revenue, which was up by 129% year over year. Net interest revenue jumped by 66% year over year as more traders use leverage to get more exposure to the stock market.
Robinhood also has a segment called "Other Revenues," which doubled year over year, primarily due to Robinhood Gold. This revenue source boosts engagement across Robinhood's services, as it offers incentives that you won't find at most brokerage firms. For instance, Robinhood Gold offers interest-free borrowing on the first $1,000 in margin, 3.25% APY on idle cash, and a 3% match on IRA contributions.
These perks help boost trading volume by making Robinhood the preferred choice. It's no wonder Robinhood closed out the quarter with 26.8 million funded customers. Its investment accounts also increased by 11% year over year to reach 27.9 million total accounts. Robinhood shares have tripled this year as more investors recognize its long-term potential. It's one of the top growth stocks right now.
Before you buy stock in Sezzle, consider this:
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Klarna Group and Sezzle. The Motley Fool has a disclosure policy.
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