In this piece, we will take a look at the 12 best cash app stocks to buy now. If you want to skip our introduction to the stock market, then check out 5 Best Cash App Stocks To Buy Now.
Courtesy of the Internet and advancements in personal computing have made the modern day world connected in ways that were previously unimaginable. Just through a simple smartphone, users can access a treasure trove of information (and misinformation) that enables them to stay up to date with events all over the world.
At the same time, the Internet, the computer, and the smartphone have also revolutionized the financial industry. Not only are investors able to make quick investment decisions based on near real time data, but the everyday consumer can also make payments from the comfort of their home or couch. Courtesy of platforms offered by companies such as Paypal Holdings, Inc. (NASDAQ:PYPL) allow people to manage their finances from their phones and even send and receive payments internationally.
However, just as is the case with consumer discretionary stocks that see their fortunes rise and fall with the state of the economy, spending, and consumer purchasing power, cash app stocks are also bound by similar constraints. After all, a vibrant economy where incomes are rising, businesses are churning out more products, and inflation is not rising allows people with more leeway to buy products and services, which then increases their spending and by extension the revenue that cash app companies make. The revenues of such firms are typically from either a fixed fee or a percentage of the amount spent, and the relation of these platforms with the economy is also a key reason analysts often pour over the results of companies like Visa Inc. (NYSE:V) and Mastercard Incorporated (NYSE:MA) to gain insight into spending behaviors and try to decipher the direction in which the economy is headed.
Another key aspect of the cash app industry is its potential to uproot the financial status quo enjoyed by traditional banks. Depending on which corner of the world you live in, opening a bank account is often not for the faint of heart and can require dealing with a laundry list of documents, uninformed branch personnel, and long delays. At the same time, unless an account holder is financially literate and can see through any hidden charges that a bank might be charging, maintaining a bank account can be a journey full of unwelcome surprises. On the other hand, the requirements to open a cash app account are lower, and they allow those out of the banking loop to easily receive payments.
Put together, these advantages and unique selling propositions of the cash app industry paint a rosy picture of its future. For instance, research suggests that 30% of retail spending across America is slated to shift over to cash apps by 2026, broadening the addressable market available to these companies and growing their revenue. Additionally, analysts from Wells Fargo also believe that the financial technology sector as a whole presents a $1.5 trillion market growth opportunity with a minimum of 6% growth until the end of this decade at least. The analysts ascribe this potential to the new features offered by financial payments platforms to retailers and merchants as well as the rising popularity of cryptocurrencies which can only be traded on a digital platform.
Finally, before we take a look at the best cash app stocks, it's also important to take a look at the current economic environment. After all, more cash flowing through the economy naturally helps the cash app companies and a tighter monetary climate erodes the funds that both consumers and businesses can spend. After fresh job openings data from the Labor Department showed that openings soared to high levels, investors were unconvinced that the Federal Reserve might flirt with keeping interest rates the same in November. This causes stocks to slump and keeps credit expensive, which then reduces the ability of consumers to spend. However, on the positive side, inflation in America might finally be coming down. Data from the Commerce Department released on September 29th shows that the personal consumption expenditures (PCE) index rose by 0.1% in August over July for the slowest rise in years while the core PCE came out below 4% for the first time in years as well. This provides a small ray of hope that the Fed might not increase rates again soon and consumers might be able to spend more should rates come down earlier than expected.
With these details in mind, let's take a look at the best cash app stocks to buy. Among these, the notable picks are Apple Inc. (NASDAQ:AAPL), Alibaba Group Holding Limited (NYSE:BABA), and Alphabet Inc. (NASDAQ:GOOGL).
12 Best Cash App Stocks To Buy Now
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Our Methodology
To compile our list of the best cash app stocks to buy, we first made a list of all companies that provide digital cash transfer and other services through a software application. Then, the number of hedge funds that had bought their shares as of June 2023 was determined through Insider Monkey's database of 910 hedge funds and the top 12 cash app stocks are as follows.
The Western Union Company (NYSE:WU) is one of the oldest payment companies in the world since it was set up in 1851. The firm has kept up with the times as it allows customers to make transfers from their phones. It expanded its digital platform in September, after teaming up with a Mexican bank to allow cash transfers through a chatbot.
By the end of Q2 2023, 31 out of the 910 hedge funds part of Insider Monkey's database had bought The Western Union Company (NYSE:WU)'s shares. Out of these, the firm's biggest shareholder is Israel Englander's Millennium Management since it owns 12.4 million shares that are worth $146 million.
The Western Union Company (NYSE:WU) joins Alibaba Group Holding Limited (NYSE:BABA), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOGL) in our list of the best cash app stocks.
Discover Financial Services (NYSE:DFS) is a digital bank that enables users to virtually open accounts and conduct financial activities. It scored a win in October when the Federal Deposit Insurance Corporation (FDIC) reached an agreement with it for consumer compliance upgrades without levying a fine.
During this year's second quarter, 43 hedge funds out of the 910 tracked by Insider Monkey were the firm's investors. Discover Financial Services (NYSE:DFS)'s largest investor in our database is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital through a $424 million stake.
Global Payments Inc. (NYSE:GPN) is an American firm that provides a smartphone application that enables the gadget to function as a credit card payment platform. Expansion in the demand for digital payments has helped the firm, as the stock is up 11.6% year to date and the firm has beaten analyst EPS estimates in three of its four latest quarters.
As of June 2023, 55 out of the 910 hedge funds profiled by Insider Monkey had held a stake in Global Payments Inc. (NYSE:GPN). William B. Gray's Orbis Investment Management is the biggest stakeholder among these due to its $713 million investment.
Sea Limited (NYSE:SE) is a diversified Singaporean consumer software company that provides mobile wallets, payment processing, and other similar services. Its shares are rated Buy on average and analysts have penned in a $16 upside based on the average share price target.
After digging through 910 hedge funds for their second quarter of 2023 shareholdings, Insider Monkey discovered that 62 had bought and owned the firm's shares. Sea Limited (NYSE:SE)'s largest hedge fund investor is Nitin Saigal and Dan Jacobs's Kora Management since it owns $223 million worth of shares.
Block, Inc. (NYSE:SQ) is one of the more popular mobile wallet companies, and its flagship product, Cash App has become the platform's namesake. It expanded Cash App's functionality in September after it teamed up with Citron to allow users to utilize additional payment methods.
Insider Monkey's June quarter of 2023 survey covering 910 hedge funds revealed that 66 were Block, Inc. (NYSE:SQ)'s investors. Out of these, the biggest shareholder is Catherine D. Wood's ARK Investment Management since it owns 10.7 million shares that are worth $714 million.
Fiserv, Inc. (NYSE:FI) provides a variety of digital banking and payments services such as bill payments and person to person transfers. The firm scored a win in September when it was named as one of the best companies in the world by Time Magazine.
Insider Monkey scoured through 910 hedge funds for their second quarter of 2023 investments and found that 68 had held a stake in the company. Fiserv, Inc. (NYSE:FI)'s largest investor among these is Natixis Global Asset Management's Harris Associates courtesy of a $1.9 billion stake.
Shopify Inc. (NYSE:SHOP) is a Canadian electronic commerce company that also operates the payment platform Shopify Payments. This allows Shopify store owners to accept payments online without relying on third party platforms. The firm has been doing quite well as of late since it has beaten analyst EPS estimates in all four of its latest quarters.
74 out of the 910 hedge funds part of Insider Monkey's database were Shopify Inc. (NYSE:SHOP)'s investors as of Q2 2023 end. Out of these, the biggest stakeholder is Catherine D. Wood's ARK Investment Management since it owns $573 million worth of shares.
Apple Inc. (NASDAQ:AAPL), Shopify Inc. (NYSE:SHOP), Alibaba Group Holding Limited (NYSE:BABA), and Alphabet Inc. (NASDAQ:GOOGL) are some top cash app stocks that hedge funds are buying.
