Financial institutions play a critical role, offering everything from consumer banking to wealth management and specialized financial solutions. But uncertainty about fiscal and monetary policy has tempered enthusiasm, and over the past six months, the industry has pulled back by 1.4%. This performance was disappointing since the S&P 500 climbed 3.4%.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here are three financials stocks we think can generate sustainable market-beating returns.
Federated Hermes (FHI)
Market Cap: $4.05 billion
With roots dating back to 1955 and a pioneering role in money market funds, Federated Hermes (NYSE:FHI) is an investment management firm that offers a wide range of funds and strategies for institutional and individual investors.
Why Could FHI Be a Winner?
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Share repurchases over the last two years enabled its annual earnings per share growth of 21% to outpace its revenue gains
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Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Federated Hermes is trading at $56.30 per share, or 10.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Mastercard (MA)
Market Cap: $449.6 billion
Recognizable by its iconic “Priceless” advertising campaign that has run in over 120 countries, Mastercard (NYSE:MA) operates a global payments network that connects consumers, financial institutions, merchants, and businesses, enabling electronic transactions and providing payment solutions.
Why Should You Buy MA?
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Impressive 16.5% annual revenue growth over the last five years indicates it’s winning market share this cycle
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Share repurchases have increased shareholder returns as its annual earnings per share growth of 21.5% exceeded its revenue gains over the last five years
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Industry-leading 169% return on equity demonstrates management’s skill in finding high-return investments
Mastercard’s stock price of $504.45 implies a valuation ratio of 25.6x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Synchrony Financial (SYF)
Market Cap: $25.71 billion
Powering over 73 million active accounts and partnerships with major brands like Amazon, PayPal, and Lowe’s, Synchrony Financial (NYSE:SYF) provides credit cards, installment loans, and banking products through partnerships with retailers, healthcare providers, and digital platforms.
Why Is SYF a Good Business?
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Earnings per share have massively outperformed its peers over the last two years, increasing by 37.9% annually
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Annual tangible book value per share growth of 15.9% over the past five years was outstanding, reflecting strong capital accumulation this cycle
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Stellar return on equity showcases management’s ability to surface highly profitable business ventures