The Top Canadian Fintech Stocks to Buy in 2022

Posted on December 3, 2021 by Dylan Callaghan

If there is one thing the Canadian tech space has been known for over the last few years, it is the development of some of the top fintech stocks in North America.

If you look to some of the most rapidly growing companies on the TSX, there is a good chance they're a payment processor/fintech style company.

Many of those looking for high growth Canadian stocks will turn to a fintech company. Have the returns dried up, or are these stocks set to provide marketing-beating returns moving forward?

Fintech, and Canadian fintech stocks, aren't going anywhere anytime soon

Financial services is one of the largest sectors in Canada, and technology is not only making it much easier in terms of lending, but it's also making online transactions much easier.

We're seeing next level growth from many top Canadian fintech stocks in terms of gross transaction volumes as they help businesses reach customers easier and process transactions smoother.

We're also seeing Canadian banks utilize fintech to drive larger deposits and fuel customer additions.

Although the cryptocurrency aspect of fintech takes up most of the spotlight, the major money is still within the financial sector, where things like payment processing, money transfers, and instant cheque deposits are fuelling the fintech market.

As such, there is a high likelihood that the fintech sector is not only going to grow, but grow at a rapid clip over the next 10-20 years as technology continues to evolve at an astonishing pace. As more and more companies penetrate the space, we will likely need to see major financial institutions here in Canada like TD Bank and Bank of Montreal either adapt, or be left in the dust.

With that being said, we've decided to publish a piece on some of the top Canadian fintech stocks to buy right now.

Lets go over these Canadian fintech companies, some of which had an extremely contrasting experience compared to Canadian travel stocks through the worst of the Covid-19 pandemic.

3 Top Canadian fintech stocks to buy now

Nuvei Corporation (TSX:NVEI)

Nuvei Logo

A relatively new company on the TSX, Nuvei (TSE:NVEI) listed in August of 2020 and has had great success since then.

What exactly is Nuvei? The company is a payment processor, offering mobile, online, and in-store payments to its merchants and partners.

Even though this is a Canadian listed fintech stock, it derives most of its revenue from the United States and also has exposure in other parts of the world, such as the United Kingdom.

The tech company supports over 500 payment methods, 150 currencies, and 40 cryptocurrencies, allowing its merchants to capture more revenue by providing more diversity for their customers and their transactions.

The company has some partnerships with major credit card companies such as American Express, Mastercard, Visa, and Discover, and over 85% of its total sales volume comes via eCommerce, a sector that is not slowing down anytime soon.

Since 2018, the company has tripled its top line, closing out Fiscal 2020 with just shy of $492M in revenue, and it states its total addressable market is somewhere in the range of $20 trillion. For those just learning how to buy stocks... it's important we take TAM with a grain of salt in most situations. But, even if it were to be just a fraction of this, it would set Nuvei up for explosive growth.

Total volumes have increase 88%, revenue 96%, and adjusted EBITDA 97% on a year over year basis and the company has a sound strategy of developing its global footprint first prior to expanding outwards and seeking strategic mergers and acquisitions.

Overall, this is a relatively young fintech company, but one that analysts expect will post significant growth over the next few years, with mid double digit growth in terms of both revenue and earnings.

Shopify (TSX:SHOP)

Shopify Logo

It would be hard to make an article about the top Canadian fintech stocks without including arguably the most successful Canadian stock of all time, Shopify (TSE:SHOP)And for some who are out of touch with Shopify's recent moves, you may not think this is a fintech stock at all. However, it very much is.

At first, the company launched as an eCommerce platform that allowed merchants to sell to their customers. The point of Shopify's platform was to make it as easy as humanly possible to get a shop up and running and start generating revenue. And during the pandemic this proved to be absolutely critical.

However, the company has evolved into much more than that. Now, the company offers fintech services to drive more revenue for its merchants and ultimately for itself. Innovations like their debit cards, buy now pay later systems, and business funding from Shopify Capital have vaulted the company into the space, and it's currently growing at a lightning fast pace.

As mentioned, the pandemic fuelled growth for Shopify exponentially, as it recorded triple digit increase in year over year revenue. For most Shopify bears, the thought was that once the pandemic subsided, many vendors who were forced to go to Shopify in order to keep their business afloat would cancel their subscription and head back to selling from brick and mortar only.

This proved to be completely false. Not only did vendors find Shopify's subscription and merchant tools well worth the subscription cost, they found it accelerated revenue to the point where operating both a brick and mortar and an online business or strictly transitioning to online was a no-brainer.

Investors who have believed in Shopify since the company's IPO have witnessed life changing returns, as the company has turned a $10,000 investment into nearly $600,000 at the time of writing in just over 6 years.

With the company's track record in terms of new products and innovations, there's almost no doubt it's going to be a dominant force in the Canadian fintech industry moving forward.

Lightspeed Commerce (TSX:LSPD)

Lightspeed POS

Once named Lightspeed POS, or Point of Sale, Lightspeed Commerce (TSE:LSPD) rebranded itself in mid-2021 to more accurately represent what this company is setting out to do, and that is to become a larger player in the Canadian fintech space.

The company has been mired in issues as of late, none of which are actually due to its performance. Headwinds such as supply chains, payment tech selloffs and a short report in which the company says contains "a significant amount of errors" have caused its share price to borderline collapse.

However, this is still a company that is set to post significant growth in the future.

So what exactly does Lightspeed do? The company provides omni-channel commerce SaaS (software as a service) platforms. The company's software allows customers to engage with its consumers, manage their operations, accept payments and overall provide a suite of tools utilized to grow their businesses.

The company has exposure all over the globe including Canada, the Netherlands, and Australia. However, the bulk of its revenue is generated in the United States. The company serves over 156,000 customer locations and has grown gross transaction volume at a 53% pace annually since 2019.

At the time of writing, the company has nearly $1.2B on the balance sheet in unrestricted cash, which should allow it to drive further growth via acquisition. Some notable acquisitions as of late have included Ecwid and NuORDER, which although came at extensive premiums, are expected to drive strong growth for the company moving forward.

Unlike Shopify and Nuvei, Lightspeed is likely a couple of years away from profitability. However, investors should be concerned with the growth of the top line instead, as this company's main priority is rapid growth and expansion.

Overall, these Canadian financial technology companies will continue to drive the future

As companies expand into new verticals in the fintech ecosystem, much like Lightspeed and Shopify have done, it unlocks new opportunities for Canadians to get exposure to the fintech space. Whether it be payroll, online payments, analytics, e-commerce, or even blockchain, there are many more Canadian fintech stocks to look at.

In this piece, we just highlighted 3 of the larger more prominent ones. If you're interested in exploring others, have a look at smaller cap options like Mogo and Payfare. And, for a crypto option, Banxa Holdings.

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed in this article. Stocktrades Ltd may also be compensated via affiliate links in this post.

Dylan Callaghan

About the author

Dylan is the co-founder of Stocktrades.ca and an avid self-directed investor. He holds a portfolio of Canadian growth and dividend growth stocks, and believes that anyone, regardless of financial status, stands to benefit from investing in the stock market. His ultimate goal with his writing and the continual development of Stocktrades.ca is to create a resource that helps Canadians, and investors from around the world, make more money and retire earlier.