The Smartest Fintech Stocks to Buy with $1,000 Right Now

There are many secular trends affecting the economy today. One of the most notable changes has occurred in the financial services sector.

Financial technology companies are gaining ground on traditional banks, and two stocks in this area deserve a closer look. Investing $500 in each of these companies would be a smart decision.

Digital banking in Latin America

Nu Holdings (NYSE:NU) has the backing of Warren Buffett, after his company invested in Nu around the time of its IPO in December 2021. At the current price, investors can acquire approximately 37 shares for $500.

This business is a banking powerhouse in Latin America, particularly in its home country of Brazil. It operates online without physical branches, offering customers credit cards, checking and savings accounts, as well as insurance and brokerage products.

Nu continues to see fantastic gains in revenue. Revenue soared 65% to $2.8 billion in the three months ended June 30. This increase is due to the addition of 6 million net new customers. The company launched in Mexico in 2019 and Colombia in 2020, and these markets are expected to support even stronger growth in the years to come.

It is also a good thing that Latin America’s financial sector is largely underdeveloped. About 70% of its population remains unbanked or underbanked, according to the news site Latin America Reports. As countries strive to improve their economic conditions, Nu has a huge opportunity to attract more customers.

Nu reported second-quarter net income of $487 million, up 116% year over year. The fact that financial results are growing faster than revenues is a clear sign of a scalable business model.

At first glance, Nu doesn’t seem that compelling from a pure valuation perspective. The shares are trading at a forward price/earnings ratio of 33 today. This represents a 38% premium over the S&P500 hint. But given the company’s incredible growth trajectory and strong profitability, investors should seriously consider adding this stock to their portfolio.

Digital banking in the United States

Investors should also consider SoFi Technologies (NASDAQ:SOFI)the leading digital banking entity based in the United States. The stock is trading at around $7.60, so a $500 investment could net investors around 66 shares.

Like Nu, SoFi does not operate any physical bank branches. Instead, it relies on its mobile app to serve its customers. The company offers a wide range of financial services products, such as bank accounts, credit cards, brokerage platform, various loans and insurance.

SoFi has seen growth slow in a higher rate environment, but the gains remain impressive. Revenue totaled $599 million in the second quarter. This figure was up 20% year over year. And the company continues to attract customers at a rapid pace. Over the past three years, the number of customers, which now stands at 8.8 million, has increased by 200%.

SoFi has never been profitable, but instead has directed its resources toward growing as quickly as possible in order to take market share from incumbent banks. But now the company has reached a financial milestone.

SoFi reported three consecutive quarters of net income in accordance with generally accepted accounting principles (GAAP)in accordance with management’s forecasts. And the good times should continue. In 2026, executives estimate the company will post earnings per share (EPS) of $0.68 (at the midpoint), compared to $0.09 to $0.10 expected this year. And after that, the projection is for annualized EPS growth of 20% to 25%.

It’s a prospect that can excite any investor. It also helps that the stock is currently trading about 70% below its all-time high price, a milestone it reached in February 2021. Investing $500 to buy SoFi stock seems like a smart move.

Should you invest $1,000 in SoFi technologies right now?

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Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool recommends Nu Holdings. The Motley Fool has a disclosure policy.