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3 No-Brainer Money-Related Stocks to Buy Right Now for Less Than $500

Motley Fool - Sun Apr 14, 2:30AM CDT

Are you a regular user of money? Of course you are. It's how you pay for -- well, everything. It's also how most of us get paid for the work we do, but even for people who are no longer working, the end-goal of that effort was securing reliable access to money in the future. We even invest money now with the hope that it will become more money later.

As long any sort of buying and selling and wealth-building needs to be done, the world will need money.

With that as the backdrop, here's a closer look at three money-related stocks you can buy several shares of -- each -- for less than $500. Just bear in mind these stocks carry above-average risk. If you know you're going to need some or all of that $500 in the near future (or if these are your very first stock picks), you might want to shop around for something a bit more predictable.

1. SoFi Technologies

You may or may not have heard of SoFi Technologies(NASDAQ: SOFI). It's a relatively young company, launched in 2011 mostly as a means of helping consumers better manage their student loan repayments. Since then, it's evolved into so much more, however, and is subsequently serving 7.5 million different customers. That's not a lot compared to most other for-profit organizations' customer counts, but it's huge for this particular outfit. And more important to would-be investors, SoFi's growth trajectory is nothing less than incredible.

SoFi Technologies is an online bank with a well-loved app. It offers everything you might expect from a major banking name, ranging from checking accounts to investments to lending to credit cards, and more. It just doesn't do any of it through brick-and-mortar bank branches.

As it turns out, consumers don't really care that much about having access to in-person service. The American Bankers Association reports that mobile apps are the preferred means of taking care of banking-related business for 48% of U.S. consumers, while online (PC) banking is the second-most preferred option at 23%. Only 9% of U.S. adults want to visit actual bank branches to take care of their banking business.

This shift is only going to continue working in mobile banking's favor, too, as younger "digitally native" consumers age and raise even more digitally native children of their own. In this vein, SoFi's current customer headcount of 7.5 million is 44% more than it had as of the end of 2022, and more than twice the number from just two years back.

SoFi stock hasn't been a particularly great performer of late, suggesting its growth in a fast-growing market hasn't impressed investors. Put this lethargy in the proper perspective though. The stock soared so much during and because of the pandemic that it really had nowhere else to go but down in the meantime. The wobbly economy has been a bit problematic as well.

The last echoes of this volatility, however, may soon be in the past.

2. Visa

Unlike SoFi Technologies, Visa(NYSE: V) is a well-known household name. The company helps the holders of more than 4 billion of its credit and debit cards purchase on the order of $15 trillion worth of goods and services every year at more than 130 million different vendors. Those numbers easily make it the world's biggest payment card middleman.

But is it a worthy investment?

It's not as if the naysayers don't have reasonable concerns. Chief among them are the points that there's only so much a company can do to make a relatively simple card-payment network more competitive. Underscoring this concern is how saturated the card and digital payment business already seems to be.

Visa still has more going for it than against it, though -- besides its sheer size.

Take innovation. The company operates a handful of independently run (including of one another) innovation centers all over the world in an effort to meet more merchant and consumer needs. One example of this innovation is Visa's artificial intelligence-powered business-to-business travel assistant, which can help users optimize trips, create an itinerary, suggest entertainment, serve as a concierge, and of course, pay for it all.

At the same time, while cards have already displaced a great deal of cash, there's still plenty of cash being used to pay for goods and services that Visa could still displace. The U.S. Federal Reserve reports that 18% of 2022's purchases made within the United States were paid for with cash, while another 13% were completed as an ACH (direct bank link) transaction; "other" made up another 9% of these purchases. All of that could eventually become card-based. The same dynamic, of course, applies overseas as well.

The thing is, Visa is slowly but surely leveraging its innovation to win this business. Analysts are calling for sales growth of more than 10% this fiscal year as well as next, with earnings expected to grow at an even faster clip.

3. Upstart

Last but not least, investors looking for a new money stock may want to take a look at Upstart(NASDAQ: UPST).

It's a credit rating agency, more or less. While it can help lenders make loan-risk assessments in the same sense that Equifax and TransUnion do, it does so in a completely different way. Rather than coming up with a formulaic credit score based on factors like income, current debt, and payment history, Upstart uses a much more holistic AI-powered algorithm based on 1,600 different data points to determine someone's creditworthiness.

And it works in a way that the company's customers love! Upstart Holdings' credit-scoring algorithm results in 53% fewer defaults than more commonly used paradigms. Said another way, Upstart's credit-scoring system allows for 44% more loan approvals without adding any additional default risk to more common loan-approval approaches.

Upstart sells access to its credit-rating platform, but it's also a lender itself. It was sitting on a little over $1.1 billion worth of loans as of the end of last year.

It's a brilliant business concept. But, the young company's experiencing most of the struggles you'd expect from a start-up. Chief among them is the lack of consistent profits. And, while Upstart Holdings' IPO completed in the middle of the COVID-19 pandemic was well received, that initial luster has definitely worn off.

Economic malaise in the meantime certainly hasn't helped either, as would-be lenders are hesitant to start test-driving new ideas.

From a bigger-picture perspective, though, things are still moving in the right direction. Although it's expected to suffer another loss this year on anemic top-line growth, analysts believe next year's projected sales growth of 28% should be enough to push Upstart Holdings out of the red and back into the black for good. The stock might be able to break out of its current funk well before then, however, as investors start seeing reason for hope.

Should you invest $1,000 in Upstart right now?

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Upstart and Visa. The Motley Fool has a disclosure policy.

Paid Post: Content produced by Motley Fool. The Globe and Mail was not involved, and material was not reviewed prior to publication.

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