Financial institutions play a critical role, offering everything from consumer banking to wealth management and specialized financial solutions. These companies have benefited from improving market activity and economic fundamentals, so it’s no surprise the industry has posted a 12% gain over the past six months, nearly mirroring the S&P 500.
Although these firms have produced good results, only a handful will thrive over the long term as fintech disruptors are rapidly taking market share from the incumbents. On that note, here are two resilient financials stocks at the top of our wish list and one we would avoid.
One Financials Stock to Sell:
Ridgepost Capital (RPC)
Market Cap: $939.2 million
Operating as a bridge between institutional investors and hard-to-access private market opportunities, Ridgepost Capital (NYSE: RPC) is an alternative asset management firm that provides access to private equity, venture capital, impact investing, and private credit opportunities in the middle and lower middle markets.
Why Do We Think Twice About RPC?
- Incremental sales over the last two years were less profitable as its 5.7% annual earnings per share growth lagged its revenue gains
- ROE of 4.5% reflects management’s challenges in identifying attractive investment opportunities
Ridgepost Capital is trading at $8.52 per share, or 7.9x forward P/E. Check out our free in-depth research report to learn more about why RPC doesn’t pass our bar.
Two Financials Stocks to Watch:
Raymond James (RJF)
Market Cap: $34.49 billion
Founded in 1962 and headquartered in St. Petersburg, Florida, Raymond James Financial (NYSE: RJF) is a diversified financial services company that provides wealth management, investment banking, asset management, and banking services to individuals and institutions.
Why Are We Positive on RJF?
- 10.8% annual revenue growth over the last two years was better than the sector average, highlighting the value of its products and services
- Performance over the past five years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $179.25 per share, Raymond James trades at 13x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Jack Henry (JKHY)
Market Cap: $10.88 billion
Founded in 1976 by two entrepreneurs who saw the need for specialized banking software in the early days of financial computing, Jack Henry & Associates (NASDAQ: JKHY) provides technology solutions that help banks and credit unions innovate, differentiate, and compete while serving the evolving needs of their accountholders.
Why Should JKHY Be on Your Watchlist?
- Share repurchases have increased shareholder returns as its annual earnings per share growth of 15.5% exceeded its revenue gains over the last two years
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
Jack Henry’s stock price of $153.98 implies a valuation ratio of 21.1x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
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