Cantwell sees a $1.5 trillion growth market for fintech, a broad marriage of finance and digital tech, driven by five themes. Topping the list: increased adoption of digital payments. He also cites modernization, as “both merchants and consumers…seek modern tools that can support their everyday lives; ” the cloud-based as-a-service model for account processing, fraud protection, e-wallets, and other services; consolidation, and the emergence of cryptocurrency.
“We believe that company fundamentals will be strong going forward, notwithstanding the challenges brought on by the current geopolitical/macro environment,” he writes. The group can boost revenue collectively by 33% this year and 26% in 2023—a two-year average of about 30%, almost three percentage points faster than in 2019. It can boost profits 15% this year and 17% next, beating the
S&P 500’s
projected 8% this year, 11% next.
Low valuations boost the appeal. The group trades at about 5.5 times the next 12 months’ sales and 16 times earnings; multiples have compressed significantly over the past six months. The group is trading at a discount to the S&P 500’s 20 times expected 2022 profits and 18 times projected 2023 profits, he adds. But this discount won’t last forever, he says, so investors should grab them now.
Next Week
Monday 4/11
Federal Reserve Bank of Chicago President Charles Evans discusses his outlook for the economy, employment, inflation, and interest rates at the Detroit Economic Club.
Tuesday 4/12
The Bureau of Labor Statistics reports the consumer-price index for March. Consensus estimate is for an 8.4% year-over-year spike for the CPI, after a 7.9% increase in February.
CarMax and Albertsons report fourth-quarter financial results.
Synopsys
,
Fifth Third Bancorp
,
Lennar
,
and
Bank of New York Mellon
hold annual shareholder meetings.
The National Federation of Independent Business releases its Small Business Optimism Index for March. Consensus estimate is for a 94.9 reading. February’s 95.7 reading was the second consecutive month below the 48-year average of 98.
Wednesday 4/13
JPMorgan Chase
,
First Republic Bank
,
Rent the Runway
,
Delta Air Lines
,
BlackRock
,
Bed Bath & Beyond
,
Hooker Furnishings
,
and
Fastenal
host earnings conference calls.
The BLS releases the producer-price index for March. The PPI is expected to jump 10.5% year over year on a nonseasonally adjusted basis, while the core PPI, which excludes volatile food and energy prices, is seen rising 8.4%. This compares with increases of 10% and 8.4%, respectively, in February.
Thursday 4/14
First-quarter results are expected from several banks and financial-services companies including Wells Fargo, U.S. Bancorp, Goldman Sachs, Morgan Stanley, Citigroup, PNC Financial Services Group, State Street, and
Ally Financial
.
Others companies reporting financial results include Rite Aid,
Taiwan Semiconductor Manufacturing
,
and
UnitedHealth Group
.
The University of Michigan releases its Consumer Sentiment Survey for April. Expectations are for a 58.9 reading, compared with 59.4 in March.
The Census Bureau reports on retail-sales spending for March. Expectations are for a seasonally adjusted 0.6% month-over-month increase in retail sales, compared with a 0.3% rise in February. Excluding autos, spending is seen rising 1.0%, compared with 0.2% in the previous period.
The BLS reports export and import price data for March. Expectations are for a 2.2% month-over-month rise in export prices, while import prices are seen increasing 0.6%. This compares with gains of 3.0% and 1.4%, respectively, in February.
Dow, Carrier Global, and
Owens Corning
hold annual shareholder meetings.
Friday 4/15
The Federal Reserve releases industrial production data for March. Economists are looking for a 0.4% rise, after a 0.5% increase in February.
U.S. stock and bond markets are closed in observance of Good Friday.
Write to Eric J. Savitz at [email protected]
FinTech Looks Like a $1.5 Trillion Growth Market
Illustration by Elias Stein
Text size
Wells Fargo
’s
Jeff Cantwell says the time to buy fintech stocks is now—14 of them. Cantwell has started coverage of the group with Overweight ratings for all. They include high-profile stocks like
Shopify
,
Block
,
and
PayPal
and the likes of
Adyen
,
Bill.com
,
Fidelity National Information Services
,
Fiserv
,
Flywire
,
Global Payments
,
Marqeta
,
Paymentus
,
Toast
,
FleetCor Technologies
,
and
Wex
.
Cantwell sees a $1.5 trillion growth market for fintech, a broad marriage of finance and digital tech, driven by five themes. Topping the list: increased adoption of digital payments. He also cites modernization, as “both merchants and consumers…seek modern tools that can support their everyday lives; ” the cloud-based as-a-service model for account processing, fraud protection, e-wallets, and other services; consolidation, and the emergence of cryptocurrency.
“We believe that company fundamentals will be strong going forward, notwithstanding the challenges brought on by the current geopolitical/macro environment,” he writes. The group can boost revenue collectively by 33% this year and 26% in 2023—a two-year average of about 30%, almost three percentage points faster than in 2019. It can boost profits 15% this year and 17% next, beating the
S&P 500’s
projected 8% this year, 11% next.
Low valuations boost the appeal. The group trades at about 5.5 times the next 12 months’ sales and 16 times earnings; multiples have compressed significantly over the past six months. The group is trading at a discount to the S&P 500’s 20 times expected 2022 profits and 18 times projected 2023 profits, he adds. But this discount won’t last forever, he says, so investors should grab them now.
Next Week
Monday 4/11
Federal Reserve Bank of Chicago President Charles Evans discusses his outlook for the economy, employment, inflation, and interest rates at the Detroit Economic Club.
Tuesday 4/12
The Bureau of Labor Statistics reports the consumer-price index for March. Consensus estimate is for an 8.4% year-over-year spike for the CPI, after a 7.9% increase in February.
CarMax and Albertsons report fourth-quarter financial results.
Synopsys
,
Fifth Third Bancorp
,
Lennar
,
and
Bank of New York Mellon
hold annual shareholder meetings.
The National Federation of Independent Business releases its Small Business Optimism Index for March. Consensus estimate is for a 94.9 reading. February’s 95.7 reading was the second consecutive month below the 48-year average of 98.
Wednesday 4/13
JPMorgan Chase
,
First Republic Bank
,
Rent the Runway
,
Delta Air Lines
,
BlackRock
,
Bed Bath & Beyond
,
Hooker Furnishings
,
and
Fastenal
host earnings conference calls.
The BLS releases the producer-price index for March. The PPI is expected to jump 10.5% year over year on a nonseasonally adjusted basis, while the core PPI, which excludes volatile food and energy prices, is seen rising 8.4%. This compares with increases of 10% and 8.4%, respectively, in February.
Thursday 4/14
First-quarter results are expected from several banks and financial-services companies including Wells Fargo, U.S. Bancorp, Goldman Sachs, Morgan Stanley, Citigroup, PNC Financial Services Group, State Street, and
Ally Financial
.
Others companies reporting financial results include Rite Aid,
Taiwan Semiconductor Manufacturing
,
and
UnitedHealth Group
.
The University of Michigan releases its Consumer Sentiment Survey for April. Expectations are for a 58.9 reading, compared with 59.4 in March.
The Census Bureau reports on retail-sales spending for March. Expectations are for a seasonally adjusted 0.6% month-over-month increase in retail sales, compared with a 0.3% rise in February. Excluding autos, spending is seen rising 1.0%, compared with 0.2% in the previous period.
The BLS reports export and import price data for March. Expectations are for a 2.2% month-over-month rise in export prices, while import prices are seen increasing 0.6%. This compares with gains of 3.0% and 1.4%, respectively, in February.
Dow, Carrier Global, and
Owens Corning
hold annual shareholder meetings.
Friday 4/15
The Federal Reserve releases industrial production data for March. Economists are looking for a 0.4% rise, after a 0.5% increase in February.
U.S. stock and bond markets are closed in observance of Good Friday.
Write to Eric J. Savitz at [email protected]
Source: https://www.barrons.com/articles/fintech-stocks-paypal-shopify-block-51649462428?siteid=yhoof2&yptr=yahoo