3 Incredible Fintech Stocks to Buy Today

A lot of fintech stocks have been cut in half over the past year. So, are there opportunities out there? We think we've got some value. So, I wanted to talk to John Quas about this. John, as we were talking about what opportunities there are in fintech, you were talking about Shift 4. Why is that such an opportunity right now for investors? >> Well, it's a very cheap stock considering how fast it is growing. And Travis, you know, we the reason that we even picked this topic to begin with is because of the rumors for the acquisition of PayPal. You're really one of the famous pioneers in the fintech space. But the rumor out there is potentially 10 times free cash flow is the acquisition price. And you look at PayPal and what it's growing only about 9% growth. You look at Shift 4. So this is a fintech company that primarily is handling these huge venues. This company trades at about 10 times its free cash flow right now. So around the rumored acquisition price for PayPal, but opposed to 9% growth, this company is growing over 30. And actually when you back out some of the transaction fees, um it's actually growing north of 40%. So extremely high growth and a reasonable valuation. >> Yeah. And the interesting thing here, what I always struggled with some of these companies was what's the real moat here? And I think what we're going to talk about with at least the first two stocks, the next one we're going to talk about is Toast. You know, if you're running a restaurant, Toast is probably what you're running on in 2026. But if you got a big venue, Shift 4 is it's not the only option, but it's really the one company that does that really well. As we were talking before, it's a little bit like the accenture of uh of payments. You know, you you start a big venue or open a big venue, you go, "Okay, I need to do this and this and this." There's not really anything specific off the shelf that you can just plug and play and go. So, Shift 4 will work with you and go, "Okay, what sort of little custom things do you need for your venue?" And the reason that that that works for them is because they know you're going to have millions of dollars going through that ecosystem and you're going to be locked in for multiple years. So, it's actually kind of a win-win for everybody. The customer gets the custom bespoke stuff that they need and Shift 4 gets a long-term revenue generation and some good margins not only on the payment processing side, but also on the subscription side. >> That's right. And you think about a re what do we mean by a large venue? I mean, think about a resort for example, how complex that whole system is. You have the booking aspect of that. Maybe it's the hotel component where you're staying, but then you're also maybe have a a restaurant on on site and then maybe a gift shop as well. And then maybe some some custom activities that your resort guests might want to do. All of these things kind of need different solutions and shift for really building a package that you can deploy all of these things across your resort in one just unified system. And so that's kind of the the value proposition. Now to be fair to be fair that the reason it does trade at such a good valuation in part is because investors question the durability of the mode kind of this you look at the venues for example some of the NFL teams the NBA teams use shift in their stadiums um that's a very high volume low margin business and kind of the thought is you know will it ever have pricing power there I think that's a fair little critique of the company and yet when you look at how cheap the stock is, it is still profitable at the take rate that it has and then being able to grow and even deploy into new stadiums. I I think it really is compelling all around. >> Yeah. And the other thing with all these companies too is they are the interface that the customer and the business are dealing with. So no matter what happens on the back end, you know, if you if maybe if maybe we do go to a world where stable coins are are a payment system, you're still going to be interacting with Shift for or a company like Toast. Toast is the one that I wanted to bring the table to the table here because this has just become the go-to company for restaurants. And the the moat around this is not just the fact that it's a really good system. They, you know, make really good hardware. I know, you know, I started a restaurant with Toast in 2018. That was kind of a novel concept, having the little handheld device. So, that was kind of a cool little thing that you could do, at least in the US. I know we had seen those in other countries before, but the other thing they've expanded to is running your entire business. I mean, you can get capital through them. You can do all your scheduling through them. So, it's it's probably one of the only pieces of software that you need if you're starting a restaurant these days. And so that's a phenomenal position for them to be because it grows the potential revenue sources. So you have the payments, you know, the the little bit of a take rate that you have there that's, you know, not a super high margin business. But then the subscription side of it where you say, okay, for all these features, you're going to pay a little bit more for each of them. But if they're adding value for you, that's the kind of thing the customers are going to be willing to pay. And then once you're in Toast, both the operator and the employees, here's the I think really the key here is the employees know how to use it. You know, if you've if you've worked in a restaurant, if you've been a bartender, uh, or a server, knowing where all those buttons are, how it works, being able to walk in and go, I can start tomorrow and you don't have to teach me how to work the the POS system. That's a really valuable thing in the restaurant space. And they've just become almost a monopolist. So love where they're sitting today. >> It's interesting that you mentioned lending because we are going to talk about that in a moment with Marcato Libre, but I couldn't agree more with your evaluation of Toast here. You look at Toast as a business, it does generate revenue in multiple ways. So you do have the the cut of the transaction. You do have the hardware and you do have the software services. When you think about those components very heavily weighted to the hardware sales up front, that's a loss. That that is at a loss. Um then it starts shifting more to the transaction volume that's fairly low margin. So again we're moving from loss to low margin but then the software module revenue starts to kick in and that's the recurring component of the business over the long term and that's actually very high margin. You look at toast already turned the corner on profitability. I think that that tailwind is just going to get stronger as it grows as all of these businesses already in the system move beyond kind of that initial startup to the long-term profit driver for the company. >> Yeah. The other piece that I wanted to add for a potential growth avenue and Toast is trading for about 20 times forward earnings. So, you know, pretty good valuation for a company that's grown revenue at about almost 20% over the past three years. But I've seen them talk about getting into things like groceries. I also think that the ordering and delivery piece of this is really interesting as opposed to a platform like Door Dash, which Door Dash is going to take kind of their pound of flesh. Uh Toast since it's already the operating system that you're using to run your restaurant, they've just added these uh delivery features and then you can say, "Hey, you know what? Check out Onar Toast." And and there's actually a Toast app. So if there's, you know, restaurants in your area that are all using Toast, you can just go in there and go to the things you normally go to. And it doesn't cost anymore to do pickup, for example, like it would typically with something like a Door Dash. But even the delivery piece is they can say, "Okay, we have our own delivery people." Uh, you know, maybe somebody that is willing to drive a mile or two if you, you know, like the old pizza model, right? That was one of a job for I had for a little while. Uh, driving pizzas around when before the Door Dashes of the world didn't exist. Or they can outsource to a company like a Door Dash and say, "Hey, here's the the cut that we'll give to those companies." So, it's really interesting where they're sitting, but that that's the power position is the operating system of the restaurant and then they're kind of able to modularize the rest of those pieces of the value chain and add what makes sense to the restaurant and and you know take out the stuff that doesn't. And if it as you know the door dashes of the world and and Uber Eats, they take more and more from those restaurants. I think a lot of restaurants are going to find it really attractive to go, okay, here's a way for us to give better prices to our customers and still offer offer the services that they need. All right, Marcato Libre is our third stock. Why do you like Marcato Libre here? >> Well, and this may be a sneaky fintech stock for many of our viewers, and that is because we do associate this company with e-commerce. However, very very big financial technology component to the business that maybe goes underappreciated for American investors, but you can do so many things with Marcato Libres's Marcato Pago. And I I think we underestimate just how rare digital financial services were in many Latin American markets just even a few years ago. And even still, um it is gaining adoption. But the company offers consumerfacing products. It also offers businessfacing products and both of these things are growing just at tremendous growth rates. In fact, surpassing the e-commerce growth in many quarters. So, uh it is an e-commerce company and it's driving some results for the company. >> Yeah, it's so interesting how they were building things that just didn't exist. So, you you know I I think I I still have not used Marcato Libra. This is one of the hard things as an investor uh in the US is you know I'm not able to try some of these uh companies products but they were a little bit like Amazon and then you realize that oh my gosh a huge piece of their business is actually the payment processing piece which is like having Amazon and you know Square let's say of a few years ago kind of packed into one company. part of the reason that Marcato Libre is trading at such a discount right now and I don't know the exact valuation off of my top of my head but I do know that it is historically inexpensive for this particular company and especially considering it's grown for uh I think it's seven consecutive years at over 30%. But this company right here it is getting more into lending. So, if you run a small business, uh you can get a loan through Marcato Libre. Even if you're a consumer, you can get a loan through Marcato Libre. And the majority of the those who are getting loans right now through the company are getting credit for the very first time. That's really interesting to think about. This is an adoption kind of a thing, but that's also kind of a a risky thing when you think about it. These are people who don't have a credit history. These are businesses that don't have a credit history. And so that gets a little bit uh disconcerning. You think about and that's why the stock has come down. It is at a cheaper valuation because investors are worried about that. The flip side of that is what company is in a better position to actually know the consumer, actually know the business and understand and offer something that is tailored to them and competitive. I think that Marcato Liber is in a very good place for that. Another thing that it's doing here recently is launching insurance technology products. Um there are the many things that are changing the game in insurance right now. It is able to look at so many factors, use AI to discern so many factors with a consumer or a business and then offer them an insurance product that is tailored to them. I think that can be really powerful long term. I don't think any company is in a better position to do it than Ricardo Libre. >> Yeah. To put those valuation numbers in perspective in 2020 they're they traded for about 20 to 25 times sales. they currently trade for just under three times sales. So that's the kind of multiple pull compression. There's also, you know, a little bit of volatility in their net margins. So that can be a piece of it makes it a little bit more expensive looking on a price to earnings multiple standpoint, but uh like you said there, as long as there's tailwinds for the business longterm, this is just one of those compounders that I think every time I think it looks expensive, it's actually ends up being cheap long term. So, let us know what you think about those three stocks, Shift 4, Toast, and Marcato Libre. And if you want more from our analyst, check out fool.com/epic. You get access to five stock recommendations from the Mly Fool each month. So, check that out if you want more investment ideas. Don't forget to subscribe to the MLool here on YouTube. Thanks for watching everybody. We'll see you here next time.