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's 3.2% return has trailed the S&P 500 by 4.9 percentage points.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Taking that into account, here are two financials stocks we think can generate sustainable market-beating returns and one we’re passing on.
One Financials Stock to Sell:
Hercules Capital (HTGC)
Market Cap: $3.34 billion
Named after the mythological hero known for his strength, Hercules Capital (NYSE: HTGC) is a business development company that provides debt financing to venture capital-backed and growth-stage technology and life sciences companies.
Why Are We Cautious About HTGC?
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 1.8% annually while its revenue grew
Hercules Capital is trading at $18.81 per share, or 9.3x forward P/E. To fully understand why you should be careful with HTGC, check out our full research report (it’s free).
Two Financials Stocks to Watch:
Moelis (MC)
Market Cap: $5.45 billion
Founded in 2007 by veteran banker Ken Moelis during the lead-up to the financial crisis, Moelis & Company (NYSE: MC) is an independent investment bank that provides strategic and financial advisory services to corporations, financial sponsors, governments, and sovereign wealth funds.
Why Do We Love MC?
- Impressive 32.5% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 299% over the last two years outstripped its revenue performance
- ROE punches in at 44.9%, illustrating management’s expertise in identifying profitable investments
At $73.71 per share, Moelis trades at 24.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Lazard (LAZ)
Market Cap: $4.87 billion
Tracing its roots back to 1848 when it began as a dry goods merchant in New Orleans, Lazard (NYSE: LAZ) is a global financial advisory and asset management firm that provides strategic advice to corporations, governments, institutions, and wealthy individuals.
Why Are We Positive On LAZ?
- Industry-leading 29% return on equity demonstrates management’s skill in finding high-return investments
Lazard’s stock price of $51.37 implies a valuation ratio of 17.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
