The realm of business services is starting to shine among the Zacks Rank #1 (Strong Buy) roster, with 19 stocks garnering strong buy endorsements in this domain. Among these stellar performers are top players in the Zacks Technology Services Industry, positioned within the top 30% of about 250 Zacks industries. The timing seems perfect for investment in two newly public technology services firms with promising trajectories.
Sofi Technologies: A Rising Star in Fintech
Priced attractively below $10, Sofi Technologies shares beckon investors with its burgeoning presence as a consumer-centric financial platform. Going public in 2021, Sofi is swiftly evolving into a diverse player in the U.S. fintech space, offering a spectrum of services including loans, credit cards, investing, insurance, and banking. The company is teetering on the edge of profitability, with projected earnings for fiscal 2024 at $0.09 per share compared to a loss of -$0.36 per share in the prior year. Additionally, the earnings per share (EPS) estimate for FY25 is anticipated to surge by a staggering 182% to $0.26.
The rapid revenue growth at Sofi underpins its future profit potential, with total sales expected to escalate by 18% this year, further projected to climb by 14% in FY25 to reach $2.81 billion.
Qifu Technology: A Dominant Force in Chinese Fintech
Making its market debut through an IPO last year, Qifu Technology emerges as a dominant fintech entity in China. As a credit technology platform, Qifu offers an extensive array of tech solutions that aid financial institutions, consumers, and businesses in the lifecycle of loans. Noteworthy is the substantial year-to-date share surge of nearly +60% by Qifu, significantly outpacing major Chinese tech players like Alibaba and Baidu, which have seen their shares decline by -8% and -35%, respectively.
Investor confidence in Qifu is on the rise, notably due to the company’s current profit-making status, with an anticipated 34% surge in annual earnings for FY24 to $4.94 per share, compared to $3.68 EPS in 2023. Looking ahead, FY25 EPS is projected to witness an additional 4% rise. The heightened earnings estimate revisions in the last 60 days for FY24 and FY25 underscore the positive outlook for Qifu.
Trading under $30 at just 5X forward earnings, Qifu’s stock valuation appears enticing in comparison to the S&P 500’s 23.7X as well as Alibaba’s 8X and Baidu’s 10.1X multiples.
Strategic Outlook
Analysts are optimistic about the growth prospects of both Sofi Technologies and Qifu Technology, with ongoing positive revisions in earnings estimates reinforcing the investment appeal of these emerging technology services firms. This juncture presents an opportune moment for investors to consider these companies as potentially lucrative bets for 2024 and beyond.