Buy 5 Mid-Cap Fintech Stocks for a Stronger Long-Term Portfolio

Financial technology (fintech) represents a transformative investment space in a hybrid sector merging finance and technology. The companies featured in the space offer a variety of services, such as online banking, peer-to-peer payments, insurance, cryptocurrency and cybersecurity. 

They are relevant because they streamline financial services and enhance efficiency and security through innovations like mobile banking, online investing and payment processing.

The financial technology space is expected to benefit from expanding transaction volumes resulting from the widespread adoption of digital means. The growing digitization movement, triggered by the pandemic, is a major catalyst for this industry. 

Here we recommend five mid-cap fintech stocks with a favorable Zacks Rank to invest in and hold for the long term. These are: BILL Holdings Inc. BILL, ACI Worldwide Inc. ACIW, Shift4 Payments Inc. FOUR, OppFi Inc. OPFI and StoneCo Ltd. STNE.

Catalysts to the Fintech Space

Fintech's innovative nature positions it as a fascinating choice in the evolving financial landscape. With the expansion of mobile and broadband networks, fintech is poised for significant growth. 

Consumer behavior is shifting toward digital platforms, fueled by convenience and cost-effectiveness. Fintech’s adaptability to changing technological needs and its ability to meet diverse consumer demands underpin its robust future. 

The rise of artificial intelligence (AI) technologies and machine learning further revolutionizes banking, payments, and investments, offering efficient and secure financial solutions. Fintech companies offer exposure to a pioneering space that is redefining personal finance. 

The chart below shows the price performance of our five picks year to date.

BILL Holdings Inc.

BILL Holdings primarily caters to small and medium businesses (SMB) with its AI-enabled financial software platform that connects customers with their suppliers and clients. BILL is benefiting from an expanding clientele, as well as a diversified business model. 

BILL is also benefiting from the strong adoption of its AI-powered financial operations platform to enhance customer experience by offering easier-to-use, more automated and predictive solutions. BILL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BILL’s leadership in automating financial operations for SMBs has been a major growth driver. BILL’s expanding product portfolio has been a key catalyst. Its strong balance sheet and free cash flow generating ability remain noteworthy.

BILL Holdings has an expected revenue and earnings growth rate of 13.7% and 11.2%, respectively, for next year (ending June 2026). The Zacks Consensus Estimate for the next-year earnings has improved 5.6% in the last 60 days. 

ACI Worldwide Inc.

ACI Worldwide develops, markets, installs, and supports a range of software products and solutions for facilitating digital payments in the United States and internationally. ACIW operates in three segments: Banks, Merchants, and Billers.

ACIW powers electronic payments for more than 5,000 organizations around the world. More than 1,000 of the largest financial institutions and intermediaries as well as 300 of the leading global retailers rely on ACIW to execute $14 trillion each day in payments. Further, thousands of organizations utilize our electronic bill presentment and payment services.

Through its comprehensive suite of software and SaaS-based solutions, ACIW delivers real-time, any-to-any payment capabilities and gives the industry's most complete omni-channel payments experience. ACIW currently carries a Zacks Rank #2 (Buy). 

ACI Worldwide has an expected revenue and earnings growth rate of 7.1% and 7.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.1% in the last 60 days. 

Shift4 Payments Inc.

Shift4 Payments is engaged in the provision of software and payment processing solutions in the United States and internationally. FOUR offers a payments platform, which provides omni channel card acceptance, and processing solutions across multiple payment types, including credit, debit, contactless card, Europay, MasterCard and Visa, QR Pay, and mobile wallets, as well as alternative payment methods, such as Apple Pay, Google Pay, Alipay, and WeChat Pay.

FOUR also provides software partner operations and support services, including software integrations and compliance management; partner support; and partner services. FOUR distributes its products through independent software vendors, internal sales and support network, enterprises, and value-added resellers. FOUR currently carries a Zacks Rank #2.

Shift4 Payments has an expected revenue and earnings growth rate of 26% and 43.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 17.2% in the last 60 days. 

OppFi Inc.

Zacks Rank #1 OppFi provides a financial technology platform that powers banks to help everyday consumers gain access to credit. OPFI operates as a specialty finance platform for community banks to extend credit access in the United States. OPFI offers installment loans through the OppLoans platform. OPFI serves consumers who are turned away by mainstream options. 

OppFi has an expected revenue and earnings growth rate of 10% and 29.5%, respectively, for the current year. The Zacks Consensus Estimate for the current-year earnings has improved 15% in the last 60 days. 

StoneCo Ltd.

StoneCo is the leading provider of point-of-sale payment processing services. STNE’s technology empowers businesses to accept credit cards, debit cards, and digital wallet payments through its point-of-sale payment solution.

Small and medium-sized businesses can use STNE to bank, pay bills, and manage accounts. In addition, because STNE collects transaction data, the company can utilize that data to assess a client’s creditworthiness and offer loans. 

STNE offers a full suite of products that allow businesses to seamlessly conduct e-commerce transactions, analyze their client base, and manage customers. STNE currently sports a Zacks Rank #1. 

StoneCo has an expected revenue and earnings growth rate of 10.9% and 4.4%, respectively, for the current year. The Zacks Consensus Estimate for the current-year earnings has improved 11.9% in the last 60 days. 

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This article originally published on Zacks Investment Research (zacks.com).

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