Fintech Stocks Poised for a Comeback: Analyzing the Sector's Resurgence

The fintech industry has faced a challenging period since 2021, with stocks in the sector struggling to maintain their momentum. However, recent market trends suggest that a turnaround may be on the horizon, as investors and analysts closely monitor the performance of key fintech players and the broader implications for the financial landscape.

Unlocking the Potential of Fintech's Resurgence

Fintech's Rollercoaster Ride: From Downturn to Potential Breakout

The fintech sector has been on a rollercoaster ride since 2021, with stocks in the industry experiencing a significant downturn. The Global X FinTech ETF (FINX), a widely followed barometer of the fintech industry, has struggled to maintain its footing, losing more than 46% of its value since November 2021. This decline has been largely attributed to the Federal Reserve's aggressive interest rate hikes, which aimed to curb inflationary pressures.However, the tide may be turning for fintech stocks. According to Wolfe Research technical strategist Rob Ginsberg, the FINX ETF is now approaching the $30 level, a significant milestone not seen since 2022. Moreover, the fund has managed to trade back above its 50- and 200-day moving averages, indicating a potential breakout on the horizon.

Fintech's Lagging Performance: A Potential Opportunity for Investors

While the broader financial sector has performed well in recent times, fintech names have lagged behind. This disparity presents a potential opportunity for investors who are willing to take a closer look at the fintech space. As Ginsberg notes, "fintech names have lagged, and appear to just be turning higher from a longer-term perspective."The FINX ETF's recent performance serves as a prime example of this trend. Despite the broader market's rally, the fintech-focused fund has struggled to keep pace, making its potential breakout all the more significant. As the fund inches closer to the $30 mark, it could signal a broader resurgence in the fintech sector, potentially validating the stock market's recent rally and the Federal Reserve's policy-easing campaign.

Identifying Promising Fintech Stocks: A CNBC Pro Scan

In an effort to uncover potential investment opportunities within the fintech space, CNBC Pro has scanned the FINX fund for stocks that meet the following criteria:- Buy rating from 60% of analysts or more- Upside to average price target of 10% or more- Listed on the New York Stock Exchange or Nasdaq- Covered by at least eight analystsThe analysis has revealed several promising fintech stocks, including Flywire, Riot Platforms, and Block, that have caught the attention of Wall Street analysts and investors alike. These companies, with their strong analyst ratings and upside potential, could be well-positioned to capitalize on the fintech sector's potential resurgence.

Broader Implications: Fintech's Resurgence and the Overall Market

The potential breakout in fintech stocks could have broader implications beyond the sector itself. A successful breakout in the FINX ETF could serve as a validation of the stock market's recent rally, which has seen the S&P 500 and Dow Jones Industrial Average reach new highs.Moreover, the fintech sector's performance could also signal that the Federal Reserve's policy-easing campaign is having the desired effect of boosting the economy. As the overnight rate remains well above the near-zero levels seen in late 2021, the fintech industry's resurgence could be a positive indicator of the broader economic landscape.As the fintech sector navigates this pivotal moment, investors and analysts will be closely monitoring the performance of key players in the industry, seeking to identify the next wave of growth and innovation that could reshape the financial landscape.