Financial providers use their expertise in capital allocation and risk assessment to help facilitate economic growth while offering consumers and businesses essential financial services. But uncertainty about fiscal and monetary policy has tempered enthusiasm, limiting the industry’s gains to 3.1% over the past six months. This return lagged the S&P 500’s 7.5% climb.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here are two financials stocks boasting durable advantages and one that may face trouble.
One financials stock to sell:
Sixth Street Specialty Lending (TSLX)
Market cap: $1.68 billion
Originally launched as TPG Specialty Lending before rebranding in 2020, Sixth Street Specialty Lending (NYSE: TSLX) is a business development company that provides customized financing solutions to middle-market companies across various industries.
Why Do We Pass on TSLX?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 7.1% annually over the last two years
- Earnings per share have dipped by 7.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term
At $17.61 per share, Sixth Street Specialty Lending trades at 9.6x forward P/E. Check out our free in-depth research report to learn more about why TSLX doesn’t pass our bar.
Two financials stocks to watch:
WEX (WEX)
Market cap: $6.25 billion
Originally founded in 1983 as Wright Express to serve the fleet card market, WEX (NYSE: WEX) provides payment processing and business solutions across fleet management, employee benefits, and corporate payments sectors.
Why Are We Fans of WEX?
- Share repurchases over the last five years enabled its annual earnings per share growth of 19.8% to outpace its revenue gains
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
WEX is trading at $183.40 per share, or 9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Jack Henry (JKHY)
Market cap: $11.19 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
- ROE punches in at 24%, illustrating management’s expertise in identifying profitable investments
Jack Henry’s stock price of $159.45 implies a valuation ratio of 21.8x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-quality stocks for all market conditions
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