Growth stocks have been on life support in recent months in the wake of soaring inflation, expectations of interest rate hikes by the Federal Reserve, and continuing concerns involving Russia and Ukraine. Financial technology (fintech) companies, which fall under the technology sector umbrella, have been particularly vulnerable, as investors carry on their transition to safer, less expensive assets in pursuit of protection from the highly turbulent stock market. As the war on cash -- which refers to the shift away from cash-based methods of payment in favor of digital payments -- gathers more momentum, many fintech companies are poised to benefit in the long run.
Understanding the industry's upward trajectory, and also knowing that fintech stocks have been battered of late, investors should be eager to get their hands on some of these companies. Although it may not feel comfortable investing under current market conditions, buying stocks at today's levels could lead to big gains down the road.
In this regard, let's look at two stocks within the fintech industry that may be worth your time and money at the moment. Oh, and they both trade for less than $100 a share.
1. SoFi Technologies
SoFi Technologies (SOFI -0.63%) provides financial products such as student and auto loan refinancing, mortgages, personal loans, credit cards, investing, and banking via mobile app and desktop. Over a six-month span, the company's stock price has crashed more than 70% to less than $7 a share today. Nevertheless, the high-growth fintech enterprise wrapped up 2021 in a marvelous way, reporting $1.01 billion in adjusted sales, or 63% growth year over year.
Fourth-quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) concluded at $5 million, marking the sixth consecutive quarter where the metric finished positive. The company delivered a net loss of $1 a share in fiscal year 2021, a notable improvement from its $4.30 a share loss a year ago.
Although the extension of federal student loan payments moratorium -- which was initially set to expire on May 1 -- to Aug. 31 will adversely affect SoFi's business, investors should still prepare themselves for another strong outing this upcoming year. Wall Street analysts are forecasting the company's top line to reach $1.47 billion in 2022, translating to a 45% increase from 2021.
Likewise, consensus earnings estimates of a loss of $0.45 a share show that SoFi is inching closer to profitability. Given the company's ability to navigate ongoing obstacles and its beaten-down price-to-sales multiple of 6.3, SoFi is an enticing investment opportunity today.
PayPal (PYPL -3.00%) offers investors an advantageous combination of stability and growth. The fintech giant, which commands a 50% share of the global payment processing software industry, has 429 million active accounts, easily making it the most accepted digital wallet across North America and Europe.
In 2021, the company increased revenue and earnings by 18% and 19% year over year, up to $25.4 billion and $4.60 a share, respectively. PayPal's knack for generating cash is rapidly improving as well -- the company capped off last year with $5.4 billion in free cash flow, equal to 21% of total sales.
Although investors can expect some growing pains this year pertaining to eBay's transition to its own payment platform and inflationary pressures, PayPal's runway for growth over the long run remains intact. Sitting at the epicenter of an enormous secular growth industry, management forecasts that its total addressable market could be as much as $100 trillion. And considering its price-to-earnings multiple of 28, representing an approximately 70% discount to its historical average, investors should be swarming to buy PayPal shares.
Fintech is our future
The war on cash is in full motion, and these two fintech stocks are trading at bargain levels today. SoFi's growth story has been remarkable up to this point, and there are no signs of the company slowing down anytime soon. PayPal has, indeed, been there, done that in the digital payment arena. This top dog in fintech has plenty of room for growth.
Do your long-term portfolio a favor and consider buying shares of these two stocks today.