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Fresh off writing about the three most undervalued fintech stocks to buy for February 2023, I’ve been asked to come up with the three best fintech stocks to buy this month. Compared with my undervalued picks, the best fintech stocks are well-known. While they aren’t necessarily mega-caps, they have products and services that most investors would recognize.
Unfortunately, now is a tough time to be thinking about fintech investments. TechCrunch recently discussed how even well-funded fintech companies are laying off employees. For instance, on Jan. 31, PayPal (NASDAQ:PYPL), one of the largest fintech companies in the world, announced that it would cut 7% of its staff, or about 2,000 workers.
With layoffs in the foreground, perhaps the best fintech stocks are large companies likely to weather the challenging macro environment much better than their smaller peers. You’ll find two of those below, plus a contrarian play. You’re also likely to note that the best fintech stocks to buy now have an international leaning.
EMFQ
Amplify Emerging Markets FinTech ETF
$22.04
MELI
MercadoLibre
$1,104.95
ADYEY
Adyen
$14.17
Amplify Emerging Markets FinTech ETF (EMFQ)
Source: shutterstock.com/ZinetroN
My first pick is the contrarian one of the bunch. Not only am I going with an ETF with the Amplify Emerging Markets FinTech ETF (NYSEARCA:EMFQ), this one invests in companies operating in both emerging and frontier markets that derive at least half of their revenue from fintech.
Emerging markets are widely expected to outperform U.S. equities in 2023 and beyond. In fact, Morgan Stanley analysts expect emerging markets to outperform over the next decade.
“Every decade, there is a new leader in the market,”said Jitania Kandhari, deputy chief investment officer at Morgan Stanley Investment Management. “In the 2010s, it was U.S. stocks and mega-cap tech. Leaders of this decade can clearly be emerging-market and international stocks.”
Interestingly, my next pick, MercadoLibre (NASDAQ:MELI), is one of the EMFQ’s top 10 holdings with a 3% weighting. However, the 10 holdings’ weights narrowly range from 2.97% to 3.92%. That’s because it’s a modified equal-weight ETF that rebalances four times per year.
The weighted average market cap is $26.3 billion with a nice mix between large caps (25%), mid caps (35%), small caps (27%), and micro caps (13%).
