This “Boring” Financial Stock Could Crush Tech Returns

Just about the only way that SoFi Technologies (SOFI +2.65%) is boring is because it’s a financial services company. Banking…mortgages…student loans…yawn. But hold on — note that it has the word “technologies” in its name. That’s because in its own way, it’s a tech stock, and one that could outperform the tech-stock world, in general.

SoFi Technologies is a fintech company — involved in both finance and technology. It’s a bank that’s working on becoming a one-stop shop for consumers, helping them save, spend, and invest via an app that also gives them access to financial planners and more.

The stock has been on a tear recently, averaging annual gains of 77% over the past three years, up 176% over the past year, and up 87% year to date (as of Oct. 22). Wow. SoFi Technologies has already crushed lots of tech stocks, performance-wise, in recent years. Consider that over the past year, it’s even ahead of semiconductor superstar Nvidia, which is up 26% — perhaps catching its breath.

In its second quarter, SoFi Technologies posted revenue up 43% year over year and net income up 459%. Better still, the company said a “record 850,000 new members joined SoFi in the quarter, up 34% from the prior year to 11.7 million.”

The company can’t keep posting triple-digit growth rates forever, but it can keep growing at a rapid clip for a while, likely long enough to keep trouncing the growth rates of many tech companies.

Think twice before jumping in, though, because shares aren’t exactly bargain-priced at recent levels, with a recent price-to-sales ratio of 11 far above its five-year average of 4. Investors might want to buy shares gradually, or wait for a better price. In the meantime, you might look at some compelling tech stocks that are more reasonably priced.