The market has not been fun for investors in 2022. Plenty of stocks have taken a hit, and all the major indexes, from the S&P 500 to the Nasdaq Composite, are experiencing bear markets.
Bear markets can be difficult, but have historically offered up excellent buying opportunities for long-term investors. During times like this, you want to keep putting your money to work in quality companies with good long-term prospects.
Three fintech stocks that look attractive as we enter November are Interactive Brokers (IBKR 3.83%), Live Oak Bancshares (LOB 0.29%), and Tradeweb Markets (TW +1.06%). Let's take a look at why these three top fintech stocks could be great buys in November.
1. Interactive Brokers: A favored trading platform for hedge funds
Interactive Brokers offers electronic brokerage services to tech-savvy investors looking to trade various financial instruments. The company spent decades building and improving its trading platform, catering to its most demanding investors.
In recent years, hedge funds flocked to Interactive Brokers to take advantage of its electronic trading platform and better execution prices. The broker attracts other investors too, and in the third quarter, its total customer accounts increased 31% from last year.
NASDAQ: IBKR
Key Data Points
Even though trading volume was down, the size of the trades increased for the broker, and it was able to grow commissions by 3% in the quarter. Aside from commissions, Interactive Brokers makes money on margin loans to its customers. The company was a big beneficiary of higher interest rates in the quarter. In the third quarter, the company's net interest income jumped 73% and was the main driver behind its impressive 70% revenue growth.
Interactive Brokers held up well this year despite volatility in the market. The company is capitalizing on this volatility and attracting more customers to its trading platform, which is why it's a solid fintech you can add today.
2. Live Oak Bancshares: A bank with a knack for investing in quality fintechs
Live Oak Bancshares is a regional bank that specializes in serving small businesses. This year marked the fifth consecutive year Live Oak Bank was the No. 1 lender through the SBA's 7(a) lending program.
NYSE: LOB
Key Data Points
Live Oak brings years of experience to small businesses lending, but also has a technological advantage -- it runs its core banking operations through Finxact's banking-as-a-service (BaaS) to roll out digital products quicker.
The technology its platform uses was a big reason the bank could process $2.3 billion in loans through the Paycheck Protection Program (PPP), the lending program introduced during the pandemic to help small businesses keep employees on the payroll.
Live Oak is also an investor in the fintech companies it uses. For example, the bank made $120 million earlier this year when Fiserv bought out Finxact. It also made another $28 million in the third quarter when it sold its stake in Payrailz to Jack Henry & Associates.
LOB PE Ratio data by YCharts
Live Oak's stock dropped nearly 70% from its peak last November, and the stock trades at a price-to-earnings (P/E) ratio of 7.14 -- putting it near its cheapest valuation since going public in 2015.
Live Oak is a quality bank that did an excellent job of serving small businesses and has a knack for making intelligent fintech investments through its subsidiaries, Live Oak Ventures and Canapi Advisors, making it an excellent buy at today's valuation.
3. Tradeweb Markets: A trading platform gaining market share
Tradeweb rolled out its digital trading platform in 1996, computerizing trading in U.S. Treasury markets. The company mainly serves institutional investors, including hedge funds, central banks, market makers, and pension funds.
NASDAQ: TW
Key Data Points
What makes Tradeweb stand out is its commitment to delivering the best customer experience possible through its trading platform while reducing client trading costs. More clients are turning to its platform for this reason.
Since 2016, Tradeweb's share of the U.S. Treasury market was 7.5%. This year, its market share is 19.6% -- nearly a threefold increase. This kind of growth is consistent across its multiple assets, including corporate bonds, equities, and money markets.
Image source: Tradeweb Markets.
In the third quarter, Tradeweb saw its revenue grow 8% from last year, while its average daily volume (ADV) was up 14%. ADV was up across all its assets, with credit markets showing the most substantial increase at 32%.
The fintech has been expensive to own, and earlier this year its P/E ratio was around 90. With the stock price down 47% from its 52-week high, it still trades at a relatively high P/E ratio of 44.8. Its one-year forward P/E ratio is cheaper at 26, reflecting strong anticipated growth -- making this another solid fintech you can begin building a position in today.
