11 Best Financial Services Stocks to Buy Now

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In this article, we’ll look at 11 of the best financial services stocks to buy now. If you want to know more about the 11 best financial services stocks to buy, go directly to 5 Best Financial Services Stocks to Buy Now.

Financial services stocks provide many different services to their customers, including banking, mortgages, insurance, and more. Traditional banks generally accept deposits and make loans, while more diversified banks also trade securities and manage assets. Insurers insure against certain risks by charging premiums.

The best financial services stocks often have a scale that allows them to achieve higher margins and also competitive advantages so they can retain market share more easily.

Like stocks of leading companies in many other sectors, stocks of leading companies in the financial services sector have seen significant headwinds in 2022.

Due to the substantial increase in inflation this year, the Federal Reserve raised interest rates 5 times. With inflation remaining high, many investors believe the Federal Reserve could raise interest rates further.

According to San Francisco Fed Chair Mary Daly, the latest core inflation reading from October 14 showed that “it shows the data is not cooperating…It was a very disappointing report, but I would say it wasn’t that surprising. I’m hoping inflation will start to come down faster, but I was prepared for it to just be slow.”

If interest rates continue to rise, many companies may find it harder to turn a profit that easily. At the same time, valuations could also fall.

As a result, the S&P 500 has fallen 25% year-to-date and the NASDAQ about 35% year-to-date.

Given the market uncertainty, it might make sense for long-term investors to hold a diversified portfolio across many different sectors. As for the financial services sector, here are some stocks that could be good long-term investments.

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Methodology

For this list, we selected 11 leading financial stocks that offered banking, insurance or other financial services. We then ranked them from #11 to #1 based on the number of hedge fund holders in our database who held shares of the same stock at the end of Q2 2022.

11 Best Financial Services Stocks to Buy Now

11. Morgan Stanley (NYSE:MRS)

Number of hedge fund holders: 58

Morgan Stanley (NYSE: MS) is a leading investment bank on Wall Street that provides capital markets services. Due to market weakness, shares of Morgan Stanley (NYSE:MS) are down 23% year-to-date and on Oct. 14 the company reported third-quarter EPS of $1.47 versus EPS of $1.98 in the same quarter last year due to headwinds. Morgan Stanley (NYSE:MS) CEO James Gorman commented on the performance, saying it was “resilient and balanced in an uncertain and challenging environment.”

While Morgan Stanley Inc (NYSE:MS) has a downside if the market continues to decline, the stock remains attractive in terms of long-term opportunities if it generates the earnings analysts expect.

Of the 895 hedge funds in our database, 58 held shares of Morgan Stanley (NYSE:MS) at the end of the second quarter of 2022, ranking it 11th on our list of the 11 best financial services stocks to buy now.

Along with Berkshire Hathaway Inc. (NYSE:BRK-B), Mastercard Incorporated (NYSE:MA) and Visa Inc. (NYSE:V), Morgan Stanley (NYSE:MS) is one of the largest financial services stocks held by many hedge funds in our database at the end of the second quarter of 2022.

10. American Express Company (NYSE:AXP)

Number of hedge fund holders: 67

American Express Company (NYSE:AXP) is a leading financial services company that provides payment and credit cards and other services. Shares of American Express Company (NYSE:AXP) have fallen 16% year-to-date, better than the S&P 500’s decline of about 25% year-to-date. Nonetheless, Citi’s Arren Cyganovitch downgraded the title from “Sell” to “Neutral” on 10/13. Cyganovich set a price target of $130 citing the potential for lower-priced business.

In the long term, American Express Company (NYSE: AXP) has competitive advantages that could make it attractive if it obtains the EPS expected by analysts.

67 hedge funds, we track stocks held by American Express Company (NYSE:AXP) at the end of the second quarter.

9. Goldman Sachs Group, Inc. (NYSE:GS)

Number of hedge fund holders: 69

Goldman Sachs Group, Inc. (NYSE: GS) is a leading Wall Street investment bank that provides capital markets services. Due to market weakness, shares of Goldman Sachs Group, Inc. (NYSE:GS) are down 21.6% year-to-date and trading for a forward C/E ratio of 7.92. Goldman Sachs Group, Inc. (NYSE:GS) shares also have a dividend yield of 3.33% as of 10/15. If the headwinds facing the economy are stronger than expected, near-term earnings for Goldman Sachs Group, Inc. (NYSE:GS) could come in below analysts’ expectations.

Nonetheless, the long-term earnings potential of Goldman Sachs Group, Inc. (NYSE:GS) remains attractive.

69 hedge funds in our database were long Goldman Sachs Group, Inc. (NYSE:GS) at the end of the second quarter of 2022, ranking it 9th on our list of the 11 best financial services stocks to buy now.

8. Citigroup Inc. (NYSE:VS)

Number of hedge fund holders: 82

Citigroup Inc. (NYSE: C) is a leading bank that provides financial services to individuals and businesses. On 10/14, Citi reported EPS of $1.63 versus consensus of $1.42. Nevertheless, there could be a recession in 2023 which could affect the future earnings of Citigroup Inc. (NYSE:C). In the long term, Citigroup Inc. (NYSE:C) has substantial scale and attractive market share.

82 hedge funds in our database were long Citigroup Inc. (NYSE:C) at the end of the second quarter, ranking it 8th on our list of the 11 best financial services stocks to buy now.

7. Wells Fargo & Company (NYSE:WFC)

Number of hedge fund holders: 83

Wells Fargo & Company (NYSE: WFC) is a leading bank that offers financial services such as bank accounts, loans, mortgages, investments and credit card services. Although Wells Fargo & Company (NYSE:WFC) shares are down only 10% year-to-date and trade for a forward price-to-earnings ratio of 8.56, the bank also faces headwinds if the US economy goes into recession. On 10/14, Wells Fargo & Company Inc (NYSE:WFC) reported third-quarter EPS of $0.85 versus consensus of $1.09. Wells Fargo & Company (NYSE:WFC) benefited from higher net interest income due to higher rates, but it could also have more write-offs in the future if the economy slips into a recession.

Like the other Big 3 US banks, Wells Fargo & Company (NYSE: WFC) is attractive over the long term because of its market share and scale.

83 hedge funds, we track shares owned by Wells Fargo & Company (NYSE:WFC) as of the end of Q2 2022.

6. S&P Global Inc. (NYSE:SPGI)

Number of hedge fund holders: 84

S&P Global Inc. (NYSE: SPGI) provides credit ratings, benchmarks, analysis and other financial services. The company operates divisions such as S&P Global Ratings, S&P Dow Jones Indices, S&P Global Commodity Insights and more.

On 10/13, JPMorgan’s Andrew Steinerman lowered his price target on S&P Global Inc. (NYSE:SPGI) to $390 from $410 and retained an “overweight” rating, citing an “inhospitable market” for many. short-term debt issuers.

Over the long term, however, S&P Global Inc. (NYSE:SPGI) is attractive as issuance will likely rebound in the future and demand for S&P Global Inc. (NYSE:SPGI) may increase.

84 hedge funds in our database were long on S&P Global Inc. (NYSE: SPGI) at the end of the second quarter.

Like S&P Global Inc. (NYSE:SPGI), Berkshire Hathaway Inc. (NYSE:BRK-B), Mastercard Incorporated (NYSE:MA) and Visa Inc. (NYSE:V) are the main financial services stocks that many funds speculative in our database held at the end of Q2 2022.

Click to continue reading and view 5 Best Financial Services Stocks to Buy Now.

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Disclosure: none. 11 Best Financial Services Stocks to Buy Now is originally published on Insider Monkey.

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