Financial firms serve as the backbone of the economy, providing essential services from lending and investment management to risk management and payment processing. But worries about economic uncertainty and potential market volatility have kept sentiment in check, and over the past six months, the industry has tumbled by 1.2%. This performance is a stark contrast from the S&P 500’s 10.9% gain.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here is one financials stock boasting a durable advantage and two best left ignored.
Financials Stocks to Sell:
Fiserv (FISV)
Market Cap: $28.29 billion
Powering over 1 billion accounts and processing more than 12,000 financial transactions per second globally, Fiserv (NASDAQ:FISV) provides payment processing and financial technology solutions that enable merchants, banks, and credit unions to accept payments and manage financial transactions.
Why Do We Steer Clear of FISV?
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Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4.1% for the last two years
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Performance over the past two years shows its incremental sales were less profitable, as its 2.8% annual earnings per share growth trailed its revenue gains
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ROE of 9.6% reflects management’s challenges in identifying attractive investment opportunities
Fiserv is trading at $49.12 per share, or 6.1x forward P/E. Check out our free in-depth research report to learn more about why FISV doesn’t pass our bar.
One Financials Stock to Buy:
SoFi (SOFI)
Market Cap: $21.38 billion
Starting as a student loan refinancing company founded by Stanford business school students in 2011, SoFi Technologies (NASDAQ:SOFI) operates a digital financial platform offering lending, banking, investing, and other financial services to help members borrow, save, spend, invest, and protect their money.
Why Should You Buy SOFI?
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Annual revenue growth of 33.4% over the past two years was outstanding, reflecting market share gains this cycle
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Additional sales over the last two years increased its profitability as the 396% annual growth in its earnings per share outpaced its revenue
SoFi’s stock price of $17.94 implies a valuation ratio of 27.6x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.