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The Smartest Fintech Stocks to Buy With $500 Right Now

Source The Motley Fool

Fintech, the broad term for financial technology, is expanding quickly as companies continue to merge their financial products with the latest tech innovations. Investors looking to tap into this momentum have their pick of stocks, but which of them is a great option to put $500 toward right now?

Let's take a closer look at why American Express (NYSE: AXP) and SoFi Technologies (NASDAQ: SOFI) could be the right place for your money if you have $500 available to invest.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »

Image source: Getty Images.

1. American Express

American Express may not be the first company that comes to mind when you think of a fintech stock, but the company's increasing list of tech-focused products, such as digital credit cards and mobile payments, and its buy now, pay later (BNPL) offerings, puts it firmly in the fintech world.

The company is coming off an impressive third quarter (which ended Sept. 30) in which sales increased 8% year over year to $16.6 billion and diluted earnings per share rose 6% to $3.49. Card members also increased their spending by 6% in the quarter, and American Express added 3.3 million new card acquisitions.

Part of the growth comes from American Express's ability to attract younger members. Millennials and Gen Z accounted for 80% of new card acquisitions for its premium Gold Card in the quarter.

If you're looking for a compelling reason to choose American Express over another fintech stock, consider that the stock is the second-largest holding Warren Buffett has in his Berkshire Hathaway portfolio. He's also held the stock since 1991, a good example to us all of what a true buy-and-hold investment strategy is.

2. SoFi Technologies

SoFi should probably win some awards for the most innovative fintech company. During the pandemic, the company had to pivot away from its bread-and-butter student loan refinancing business to other offerings amid a government-mandated pause on student loan repayments.

SoFi has successfully done that and now offers checking and savings accounts, credit cards, and investing services, as well as loans and refinancing. Not only did the company do a good job expanding its product mix, but it also grew rapidly while doing it. The company now has more than 10 million members, a massive increase from just 1 million five years ago.

Sales and earnings growth has been brought along with all of those members, pushing revenue up 30% to $697 million in the third quarter (ended Sept. 30) and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rising 90% to $186.2 million.

If there's one thing investors may want to be a little cautious about with SoFi, it's that the stock is expensive. SoFi's shares have a forward price-to-earnings ratio of 77 right now, more than American Express' 19.7 and higher than the S&P 500's forward P/E of 23. That doesn't mean you should ignore SoFi, but if you're considering buying shares now, it may be best to start with a small position and add to it over time.

Both these companies are making significant inroads in the fintech space, and they're doing it at a time when the market is growing quickly. The latest report from BCG estimates fintech could become a $1.5 trillion market by 2030. That makes now a good time to consider picking up some shares as this market expands.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $357,084!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,554!*
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $462,766!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of January 13, 2025

American Express is an advertising partner of Motley Fool Money. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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