2 Best Fintech Stocks to Buy in March

If history is any indication, March should be a decent month for the stock market. A recent analysis by Liberated Stock Trader found that S&P 500 has historically gone up about 1% in March on average, going back to 1970. It’s not the best month (that would be November with an average return of 1.6%), but it’s better than February, May, June, July , August, and September, and it is linked to October.

Of course, this is an average, so certainly the month has its share of ups and downs. But if you’re looking to add some long-term stocks to your portfolio this March, you can find some great fintechs at discounted valuations. Here are two good options.

1. PayPal

PayPal (PYPL -0.87%), the granddaddy of payments fintechs, has seen its price-to-earnings (P/E) ratio drop over the past two years, from over 70 in the summer of 2021 to around 35 right now. That may still seem high for many stocks, but for PayPal it’s more in line with its historical range and mostly as low as it’s been since 2016.

Furthermore, it currently has a P/E-to-growth (PEG) ratio of 0.85. Because it is below 1, it indicates a stock that is undervalued based on five-year growth forecasts.

PayPal had become highly overvalued — its stock price rose roughly 116% in 2020 and rose to more than $300 per share in the summer of 2021. This was driven by pandemic economics as lockdowns and social distancing forced more people to shop and pay online. But it crashed in the second half of 2021 and was down 62% in 2022 as the bubble burst for many tech and overvalued stocks. At the same time, growth in total payment volume slowed as a result of the pandemic, due to more people shopping in stores as well as inflation.

But overall, while growth may not have been at the astronomical levels of 2021 and 2020, total payment volume grew 13% year-over-year to $1.36 trillion in 2022, and revenue grew 10% for the year.

While economic headwinds remain in the form of a potential recession, inflation has eased and the company is upbeat about growth prospects, projecting 7.5% growth in first-quarter revenue. For the full fiscal year, the company expects earnings of $3.27 per share, which will be up from $2.09 last year. With tons of free cash flow and a more reasonable valuation, PayPal is poised for growth.

2. Nasdaq

Nasdaq (NDAQ -0.07%) is of course the company that runs the Nasdaq stock exchange. The company earns most of its revenue from trading its indices, but it also generates revenue through market intelligence subscriptions and software-as-a-service (SaaS) offerings, as well as fees for listing the indices and licensing them to mutual funds and exchange-traded funds .

The Nasdaq is a great stock that, until 2022, had not had a negative year since 2009. Over the past 10 years as of February 27, it has returned an average annual return of 18.4% and an average total return of 20.5% – – and it has a healthy dividend that it has increased for 10 years in a row.

With the moat of being one of only a handful of index providers, along with its growing data and technology businesses, Nasdaq has been a steady earner. Over the past 10 years, annual earnings per share have grown at an annual clip of 12.8%. Even last year, which was a tough year, earnings per share were only down 4% for the year, while annual revenue was up 5%.

NDAQ data from YCharts

There are a couple of good reasons why now is a good time to consider this stock. First, it did a 3-for-1 stock split in August, which brought the stock price down to a third of what it was. Currently, the Nasdaq stock is trading at just $56 per share. So it’s a lower entry point, but it also has a reduced valuation as the share price was down 11% in 2022 and is down 7% year-to-date in 2023. As a result, the P/E ratio is down to around 25 , from over 30 by the end of 2022 and more in line with its historical range.

Nasdaq may struggle a bit in the short term, but as tech stocks continue to recover, so will Nasdaq, the company known for its popular tech-focused indexes.

As we head into March, both the Nasdaq and PayPal are relatively good bargains with good results that should continue to be long-term growers.