As March begins, the S&P 500 is near its all-time high, but not all stocks are costly. Fintech offers great prospects for risk-tolerant long-term investors. Here are two firms that are great investments when winter ends.
Genuine disruptor with outcomes Lemonade (NYSE: LMND) is an insurance firm that uses technology to solve client problems. Claim processing may often be done in seconds, and acquiring and accepting insurance quotations is easy.
Lemonade's fourth-quarter results were startling. Revenue, in-force premium, and adjusted EBITDA exceeded its target. The latter saw losses narrowing swiftly.
Management aims to be cash-flow positive in 2025 and adjusted EBITDA profitable in 2026. With roughly $1 billion in cash and investments, the company has room to grow.
In addition to these figures, the company's loss ratio improved to 77% from 89% in the fourth quarter of 2022 and barely beyond its 75% long-term aim. Insurance profitability is seasonally high in the fourth quarter.
Lemonade's stock fell over 20% after the report, despite its strong performance. Management's sales projection for 2024 was smaller than investors expected, and the company stated it's reverting to growth mode, which might hurt profitability. However, the company's numbers are improving. Patient investors could benefit greatly if management can grow the business and meet profit projections.
Deep-value fintech with great potential PayPal's (NASDAQ: PYPL) recent results were good. Despite a 2% drop in active users in the fourth quarter, the company increased total payment volume by 15% by engaging its most loyal consumers.
It generates $5 billion in free cash flow annually and is tremendously lucrative. It also has almost $17 billion in cash. In recent years, PayPal's price has fallen as user growth stagnated and its growth strategy is uncertain. PayPal has fallen 80% from its 2021 highs.
Alex Chriss, who became CEO a few months ago, is already implementing AI-driven growth plans. However, whether he can boost revenue and earnings is unclear for now. With 2024 earnings estimated to be $5.10 per share, PayPal trades for less than 12 times ahead earnings. Long-term investors that buy shares during this huge company's strategy transition may profit.
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