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The 5 Best Fintech Stocks to Buy for 2018 – Fortune

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Though it may seem stodgy—not to mention highly regulated—compared with Silicon Valley, the financial sector offers some of the best ways to play tech trends. After all, technology is bringing financial services to unbanked corners of the world and allowing consumers to pay for goods using just their smartphones. And there’s nary a financial institution that isn’t exploring blockchain, the technology underpinning Bitcoin and the ways it could transform the movement of money. Larry Puglia, manager of the T. Rowe Price Blue Chip Growth Fund, likes Fiserv (fisv), which provides the banking industry with payment processing services and palm-scanning biometric authentication technology, and has grown earnings for 25 years straight. “They generate a lot of recurring revenues,” Puglia notes.

For a play on big data and A.I., Ian Mortimer, comanager of the Guinness Atkinson Global Innovators Fund, likes Intercontinental Exchange (ice). Though best known as the owner of the New York Stock Exchange, the company now gets more than $2 billion, or nearly half, of its revenues from its burgeoning market data and analytics business, which has found a lucrative niche in the age of quantitative and A.I.-driven hedge funds. “That becomes a quite valuable commodity,” Mortimer says, adding that the valuation is more attractive than some of the IPO companies listing on the NYSE. “I wouldn’t have thought you could have a [company that’s both a] banking company and a technology company trading at less than 20 times next year’s earnings,” he adds.

Mortimer also owns PayPal (pypl), whose P/E is a pricier 31 times 2018 earnings. He thinks it’s worth paying up for the company, which has recently expanded from e-commerce into lending, and is likely to soon realize more revenue from its popular Venmo payment app. Mortimer sees PayPal growing sales at a 20% clip in the coming years—far faster than traditional banks, whose average sales are expected to grow just 5% next year.

It’s easy to forget that PayPal’s plastic-based frenemy, Mastercard (ma), is technically classified as an IT company. More diversified than Visa (v), Mastercard gets a higher proportion of its revenue from outside the U.S., positioning it to win as consumers around the world switch from cash to electronic payments and from bricks and mortar to e-commerce, says Greg Dunn, comanager of the Thornburg International Growth Fund. “They have built a really defensible business that benefits from those secular trends,” he says. Across the pond, Dunn also owns Wirecard, a German payment processor that facilitates online transactions for global airlines and retailers such as Ikea. In recent years, Wirecard’s business has steadily expanded geographically, and Dunn expects it will soon go truly global.

Here are more of our picks for 2018:

A version of this article appears in the Dec. 15, 2017 issue of Fortune, as part of the article “Investor’s Guide 2018 — Stocks and Funds: The All-Tech Portfolio.”