The Sleeper Fintech Stock That Could Surge Before Wall Street Notices
Key Points
Shares of this innovative payments enterprise trade 77% below their peak, supporting its low valuation.
Two key operating segments continue to register solid growth.
By investing in Bitcoin-related products and services, this fintech stock could soar as the crypto's price rises.
- 10 stocks we like better than Block ›
The last several years have been very interesting for investors to watch. For instance, some companies experienced a surge in demand during the pandemic, only to see those gains slow down as the economy normalized. This resulted in market sentiment that registered wild swings.
One fintech stock in particular ended up being a clear portrayal of this volatile trend. And right now, it trades 77% below its all-time high, which was established in August 2021. Continue reading to learn more about this business and why it could surge before Wall Street notices.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Block.
This fintech stock trades at a compelling valuation
The main reason why this business should be considered a sleeper pick is because of its valuation. Shares of Block (NYSE: XYZ) currently trade at an attractive EV-to-EBIT ratio of 15.1. In a market environment in which valuation is a leading concern, this opportunity stands out.
All else equal, investors should want to pay a lower valuation multiple as opposed to a more expensive one. This introduces a margin of safety should your expectations about a company's future results end up being too optimistic. Allocating capital in this manner helps to minimize the downside risk.
Block is a growing and profitable business. The Square segment posted 9% year-over-year gross profit growth in the third quarter. Cash App, with its 58 million monthly active users, saw gross profit rise at an even better 24% during the third quarter. And the company's operating income has been soaring.
Bitcoin is an underappreciated focus
The main offerings of Square and Cash App deservedly get most of the attention from the investment community. As a result, the company's Bitcoin (CRYPTO: BTC) initiatives can easily be overlooked. Investors interested in Block should understand what's going on.
I believe Bitcoin presents the business with underappreciated upside. CEO Jack Dorsey has been publicly bullish on Bitcoin since 2021, with his belief stemming from the view that the internet will need a native currency. By being digital, decentralized, and scarce, Bitcoin is the best candidate to fulfill that purpose.
Block's Bitcoin projects span a wide range of activities. The company sells a Bitcoin self-custody wallet called Bitkey. It offers a suite of cryptocurrency mining equipment under the Proto moniker. Cash App users can trade Bitcoin. And Square sellers are now able to accept Bitcoin payments.
Should Bitcoin's price start to quickly rise, it can lead to a rapid positive shift in market sentiment. The investment community could start to view Block as an even more forward-thinking enterprise that's better positioned than its peers when it comes to Bitcoin. At that time, the valuation might reach a less attractive entry point.
Should you buy stock in Block right now?
Before you buy stock in Block, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Block wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $450,256!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,171,666!*
Now, it’s worth noting Stock Advisor’s total average return is 942% — a market-crushing outperformance compared to 196% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of February 1, 2026.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Block. The Motley Fool has a disclosure policy.
Recommended Articles
