7 Cheap Fintech Stocks to Buy Before They Come Back in 2023

When you think of sectors that have a chance to roar back in 2023, financial technology (fintech) might not be the first thing that comes to mind. Still, this may be a time to look for value in these cheap fintech stocks.

First, many of these fintech stocks are now oversold. This means that they are well positioned to increase in value based on good news in the economy. Two, many fintech companies take advantage of markets such as microfinance and “buy now, pay later”. These help non-bank or sub-banks with the financial flexibility they need. Three, these are also companies plugged into Gen-Z, a key demographic that has grown up with a disregard for traditional banking and a preference for mobile and digital solutions.

That said, if you have room for risk in your portfolio, here are seven cheap fintech stocks you can buy while they’re still attractively priced.

Upstart Holdings (UPST)

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Upstart Holdings (NASDAQ:ESTABLISHMENT) had a disastrous earnings report in November after an earlier poor report. Income is down. In addition, the company went from being profitable to having negative earnings in the last two quarters. That might make it an odd candidate to lead this list of cheap fintech stocks. Still, UPST stock is down 88% over the past 12 months, and it may be time for opportunistic investors to jump in.

The reason is simple enough. Inflation is causing many consumers to rely on credit to make ends meet. And with only 48% of Americans having access to prime credit, Upstart fills an important niche.

Upstart is a peer-to-peer lending platform that uses artificial intelligence (AI) and machine learning to determine an applicant’s creditworthiness. With rising interest rates, the company may not be able to qualify as many applicants. However, those who qualify are less likely to default.

In the short term, the bears are in control and short interest is high. However, the upstart is expected to grow both revenue and earnings at a double-digit rate over the next five years. If nothing else, Upstart is a monitoring candidate.

Toast

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Toast (SNEEZE:TOAST) supplies hardware and software solutions for points of sale aimed at the restaurant industry. That makes it a strong candidate for growth in 2023. At the outbreak of the pandemic, it was cheaper for consumers to eat at home. Now things are starting to change for the better for restaurants.

In fact, revenues are now growing both sequentially and year-on-year. In the company’s November earnings report, Toast said revenue grew 55% year over year. While the company isn’t yet profitable, it’s expected to turn a profit in 2024. And as I wrote back in December, at least one analyst thinks Toast could turn profitable on an adjusted EBITDA basis sometime in 2023.

The TOST share went public in 2021. It is down over 67% since then, and it was down approx. 38% in 2022. As the company continues to add locations on a regular basis, this could be a compelling time to put Toast on the list of cheap fintech stocks.

Confirm (AFRM)

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As inflation rose in 2021 and 2022, the “buy now, pay later” movement took hold of the economy, with Confirm (NASDAQ:AFRM) as one of the leaders. To help, the company started a collaboration with Amazon (NASDAQ:AMZN) in 2021. This gave Amazon a presence in the “buy now, pay later” market. Affirm also has a relationship with Walmart (NYSE:WMT), a company that continues to compete effectively with Amazon.

However, the BNPL model is drawing scrutiny as many financial professionals and consumer advocates warn of the pitfalls associated with extending payments, particularly the risk of overspending. Still, before the holidays, many analysts suggested that the final season could see an increase in BNPL activity. If it was realized, it could be reflected in Affirm’s earnings which the company will deliver in early February.

Fiserv (FISV)

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Fiserv (NASDAQ:FISV) provides the infrastructure for other companies to facilitate digital payments and account processing in a variety of forms. The company has over 1.4 billion global accounts that include over 10,000 financial institutions.

Unlike other fintech stocks, Fiserv is down just 7.8% over the last 12 months. Investors will learn more about this when the company reports fourth-quarter (and full-year) earnings next month. The good news is that the company is projected to deliver average revenue growth in the mid-teens over the next five years.

SoFi Technologies (SOFI)

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There is no shortage of opinions regarding SoFi technologies (NASDAQ:SOPHIE). While most of it is negative thanks to the Biden administration’s student loan moratorium, I take comfort in knowing that the problem won’t last forever. Nor is it the case that the company is losing customers. Revenue increased by over 60% in the last 12 months. Sure, the company may not be profitable yet. However, at around $5 a share, it’s safe to say that most of the bad news appears to be priced in.

Bread financial (BFH)

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Bread economically (SNEEZE:BFH) takes a digital-first approach that drives business-to-consumer and direct-to-consumer solutions that help “bring ease, empowerment and financial flexibility”. As the company’s latest earnings presentation shows, it continues to onboard new customers and retain its existing customers.

It is likely that these solutions will be in demand as consumers continue to balance inflation, rising interest rates and inflation. And right now, the company’s balance sheet appears strong enough to protect against the possibility of rising defaults in 2023.

Unlike many of the companies on this list of cheap fintech stocks, Bread Financial is profitable and it even managed to pay a small dividend in 2022. Investors can expect more information when the company reports earnings on January 26.

Bill.com (BILL)

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Last on this list of cheap fintech stocks is Bill.com (SNEEZE:BILL). The software-as-a-service (SaaS) company provides the infrastructure in the form of cloud-based software for small and medium-sized businesses. This allows these businesses to “make paper-based manual transaction processing obsolete.”

The company estimates that 90% of US businesses still use paper checks and other manual processes. If, as expected, unemployment rises in 2023, that would be a positive for a company like Bill.com, making some of these positions redundant.

Like many companies on this list, Bill.com presents a similar financial picture. Revenue continues to grow on a sequential and year-over-year basis. But the company is not yet profitable and it may take some time before it is. Nevertheless, turnover and earnings are expected to grow strongly over the next five years. And analysts are giving the stock a price target of over $185, which would be an 85% gain from today’s levels.

As of the date of publication, Chris Markoch did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Guidelines for publication.