Financial firms serve as the backbone of the economy, providing essential services from lending and investment management to risk management and payment processing. But uncertainty about fiscal and monetary policy has tempered enthusiasm, limiting the industry’s gains to 1.4% over the past six months. This return lagged the S&P 500’s 6.8% climb.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Keeping that in mind, here are two resilient financials stocks at the top of our wish list and one we would avoid.
One financials stock to sell:
Main Street Capital (MAIN)
Market Cap: $5.00 billion
With a focus on building long-term partnerships rather than quick transactions, Main Street Capital (NYSE: MAIN) is a business development company that provides long-term debt and equity capital to lower middle market and middle market companies.
Why Are We Hesitant About MAIN?
- Muted 5.5% annual revenue growth over the last two years shows its demand lagged behind its financials peers
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 2.7% annually while its revenue grew
- Capital trends were unexciting over the last two years as its 6.7% annual tangible book value per share growth was below the typical financials firm
At $53.78 per share, Main Street Capital trades at 14.3x forward P/E. Dive into our free research report to see why there are better opportunities than MAIN.
Two financials stocks to watch:
TPG (TPG)
Market Cap: $7.44 billion
Founded in 1992 and managing over 300 active portfolio companies across more than 30 countries, TPG (NASDAQ: TPG) is a global alternative asset management firm that invests across private equity, credit, real estate, and public market strategies.
Why Is TPG Interesting?
- Impressive 24.2% annual revenue growth over the last five years indicates it’s winning market share this cycle
TPG is trading at $44.65 per share, or 14.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Paymentus (PAY)
Market Cap: $4.2 billion
Founded in 2004 to simplify the complex world of bill payments, Paymentus (NYSE: PAY) provides a cloud-based platform that helps utilities, municipalities, and service providers automate billing and payment processes.
Why Do We Love PAY?
- Market share has increased this cycle as its 39.5% annual revenue growth over the last two years was exceptional
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 47.8% outpaced its revenue gains
Paymentus’s stock price of $33.36 implies a valuation ratio of 35.1x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
High-quality stocks for all market conditions
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