3 Undervalued Stocks to Buy on the Dip

Last week, the markets took a noticeable tumble.

However, with the S&P still hovering just 3% below its all-time peak, this kind of pullback is more like a reality check rather than a crisis. 

The real carnage, though, hit the frothy corners of the market: the high-flying, speculative stocks where greed overtook fundamentals and valuations. 

As a group, they suffered a 7% decline, although some were down as much as 40% in a matter of days. This isn’t too surprising given their frothy gains over the last couple of months and their disconnect from reality. 

So, where’s the opportunity right now? 

I’m bullish on fintech stocks. 

Like their high-flying, speculative peers, these stocks do have momentum, BUT they remain reasonably valued while powerful catalysts are looming. 

Fintech stocks represent a unique overlap between traditional finance stocks and cutting-edge technology. The sector is rapidly transforming banking, lending, and payments — to the tune of projected 17% annual growth and an expected worth of $1 trillion by 2032.

With 20%+ revenue growth and 35% margins — nearly triple the S&P 500 — fintech stands to gain from falling rates, potential deregulation, and AI advancements in the financial realm. 

Adoption is soaring: 70% of U.S. adults used mobile banking last year, up from less than 50% in 2019, with many younger users bypassing traditional banks for platforms like Square and PayPal.

From an investing perspective, some of the biggest tech winners in history have a consistent formula: strong revenue growth, a constantly expanding TAM, and juicy margins. 

In today’s article, I want to discuss 3 fintech stocks that share the aforementioned characteristics:

BGC Group, Inc. (NASDAQ: BGC)

BGC Group (BGC) spun off from Cantor Fitzgerald in 2004, is a fintech and brokerage firm, clearing trades in bonds, forex, and equities while expanding into energy, derivatives, and crypto. 

Here’s a fun fact: Current Commerce Secretary Howard Lutnick is the former CEO of BGC. He played a key role in its growth. 

With institutional clients like banks, hedge funds, and governments, the firm stands to gain from deregulation, as compliance is a major cost. AI advancements will enhance execution and product offerings, while lower rates should boost trading volumes, particularly in fixed income and futures, driving growth for Fenics and BGC.

But that’s just part of why Steve Reitmeister, Editor-in-Chief of our Zen Investor stock-picking newsletter, called BGC “One of the best stocks of 2025” — it’s also got stellar fundamentals.

With a Zen Rating of A (Strong Buy), BGC ranks in the 98th percentile of the 4500+ stocks we track — an elite group of stocks that have averaged annual returns of 32.5% over the past 22 years, far outpacing the S&P 500’s average annual return of 10.5%. 

To see BGC’s areas of strength, you can simply turn to the 7 Component Grades within the overall Zen Rating. 

For example, BGC is ranked in the top 8% of stocks for Financials — not surprising given its strong cash position, rock-solid balance sheet, and steady operating performance. 

It also ranks in the top 20% of stocks for Value, yielding a B rating. Among the 21 Value Factors reviewed, this rating is supported by the company’s low forward P/E of 7.4, which is less than a third of the S&P 500’s forward P/E of 22. 

Upstart Holdings, Inc. (NASDAQ: UPST)

Founded in 2012 by ex-Google employees, Upstart (UPST) leverages AI for smarter lending decisions. It manages a $35 billion loan book with 1.5 million borrowers and has averaged 25% revenue growth over the past five years.

Its AI-driven approach has led to higher approval rates with lower credit risk, reflected in strong earnings and optimistic guidance, particularly in auto loans.

As one of the first to fully integrate AI into lending, UPST benefits from advancing AI and should see increased originations and lower delinquencies as rates fall. A favorable regulatory environment could further accelerate partnerships and reduce compliance costs.

Our quant ratings model is also bullish on UPST. With an overall B (Buy) Zen Rating, it’s in a class of stocks that have produced an annual return of 19.88% since 2003.

Its sector also has strength as the Credit Services industry is rated an A by the Zen Ratings.  

Get a more holistic perspective of UPST by checking out its 7 Component Grades. 

For Growth, UPST is rated an A, ranking in the top 2% of stocks we track. This is not surprising given that it delivered a 56% increase in revenue last quarter compared to last year. Further, the company has a more than $1 billion backlog and has increased its partnerships with banks and other financial institutions which should drive further adoption and growth.  

UPST also enjoys strong support from Wall Street analysts, with 4 Strong Buy ratings and 2 Buy ratings with an average consensus forecast of $77, implying 16% upside. 

Affirm Holdings, Inc. (NASDAQ: AFRM)

Affirm Holdings (AFRM), founded in 2012 by PayPal (NASDAQ: PYPL) co-founder Max Levchin, has disrupted digital payments with its buy-now-pay-later (BNPL) model.

With 18 million users and $2 billion in GMV, AFRM’s revenue has surged 48% over two years, fueled by key partnerships with Amazon and Shopify. Its latest earnings beat expectations, with revenue up 45%, and analysts now forecast cash-flow positivity by 2026.

AI-driven credit decisions have cut delinquencies and processing costs, while lower rates and deregulation could further boost growth by increasing demand, reducing borrowing costs, and easing compliance burdens.

AFRM’s strong fundamentals are also reflected in the Zen Ratings as the stock is rated a B (Buy). Strong Buy-rated stocks have produced an average annual return of 19.88%.

Among the 7 Component Grades, AFRM shines for Growth, where it has an A rating and ranks in the top 2% of stocks we track.  

That’s not all. Everyone loves momentum, right? It’s a strong suit for LQDT; it ranks in the top 13% of stocks we track based on a review of 22 factors including sub-industry momentum, share turnover, volume-weighted momentum, and more. 

It also has a consensus price target of $72, implying 12% upside in the coming year. Out of 16 Wall Street analysts who cover the stock, 8 have a Strong Buy rating, 2 have a Buy rating, and the 6 remaining have a Hold rating. With these factors, it’s not surprising that the stock has an A rating for Sentiment. See all the ratings and forecasts for AFRM here

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