Fiserv – Solid, Cheap, Well-Positioned
Fiserv is the kind of company you buy when you want stability. It’s one of the more established players in the payments and fintech infrastructure space, with sticky products and a diversified client base. The stock trades at a very low valuation relative to peers, as well as historically – with a forward P/E of 17 that looks downright cheap compared to other fintech names, especially considering the rapid earnings expansion. Debt sits around 2–3x EBITDA, which isn’t nothing, but it’s supported by strong and consistent cash flows.
The upside with Fiserv is clear: predictability and scale. The downside? Slower growth (under 10% in revenues), and sometimes the company feels a little too “legacy” compared to the new disruptors popping up in the space. Every now and then, a story pops up about Fiserv losing market share to competitors, and that may have contributed to the stock’s recent downturn.
However, I think that the business model is very sticky, and Fiserv has established strong customer relationships, which will eventually lead to a rebound of the stock. The selloff wasn’t backed up by the numbers, which is why I invested. I told myself it would be easy money, a 30–50% cycle back around ATHs. The point is: I still believe in it, and the company is very likely to do well. That said, there is a disruptor that has caught my eye more recently.
Shift4 – Founder-Led Growth Rocket
Shift4 is a very different story: much smaller than Fiserv, but growing significantly faster. The company is founder-led by Jason Isaacman – one of Elon Musk’s best buddies and a strong operator with a track record of execution. I really like companies led by innovators, passionate about their projects, who use market drawdowns as opportunities to load up their own stake.
Shift4 has built an exciting business in payments processing, and while it doesn’t have a meaningful P/E yet – due to its focus on top-line growth rather than profitability – its EV/revenue multiple is significantly lower than Fiserv’s: around 2 compared to Fiserv’s ~5. In other words: investors are still getting growth at a very reasonable price. Debt is similar to Fiserv’s, around 2–3x EBITDA, so it’s not risk-free, but manageable as long as growth continues.
The bull case here is simple: Shift4 has the speed and vision to carve out a meaningful niche, while incumbents move slower. The only issues I have are stability and the risks of a possible economic cooldown, since the company is not yet a cash-flow machine like Fiserv. It’s intriguing, and I will continue to weigh the pros and cons. The reason why I don’t want to have both in my portfolio is that my core fintech holdings are DLocal and Nu – two of my highest-conviction positions – and I don’t want to lean too much into one industry.
