Financial institutions play a critical role, offering everything from consumer banking to wealth management and specialized financial solutions. Still, investors are uneasy as companies face challenges from an unpredictable interest rate and inflation environment. These doubts have certainly contributed to the indutry's recent underperformance - over the past six months, its 10.9% gain has fallen behind the S&P 500's 21% rise.
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 financials stocks boasting durable advantages and one that may face trouble.
One Financials Stock to Sell:
Carlyle (CG)
Market Cap: $19.2 billion
Founded in 1987 with just $5 million in capital and named after the iconic New York hotel where the founders first met, The Carlyle Group (NASDAQ: CG) is a global investment firm that raises, manages, and deploys capital across private equity, credit, and investment solutions.
Why Are We Cautious About CG?
- 3.3% annual revenue growth over the last two years was slower than its financials peers
- High net-debt-to-earnings ratio of 7× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $53.32 per share, Carlyle trades at 11.5x forward P/E. Check out our free in-depth research report to learn more about why CG doesn’t pass our bar.
Two Financials Stocks to Buy:
Shift4 (FOUR)
Market Cap: $4.74 billion
Starting as a payment gateway provider in 1999 and now processing over $200 billion in annual payment volume, Shift4 Payments (NYSE: FOUR) provides integrated payment processing solutions and software that help businesses accept and manage transactions across in-store, online, and mobile channels.
Why Will FOUR Beat the Market?
- Impressive 26.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 45.3% annually, topping its revenue gains
- Acceptable return on equity suggests management generated shareholder value by investing in profitable projects
Shift4 is trading at $69.29 per share, or 11.8x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
American Express (AXP)
Market Cap: $248.5 billion
Recognizable by its iconic green logo and the slogan "Don't leave home without it," American Express (NYSE: AXP) is a global payments company that issues credit and charge cards, processes merchant transactions, and offers travel and lifestyle benefits to consumers and businesses.
Why Are We Backing AXP?
- Annual revenue growth of 12.1% over the last five years beat the sector average and underscores the unique value of its offerings
- Share buybacks catapulted its annual earnings per share growth to 29.9%, which outperformed its revenue gains over the last five years
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
American Express’s stock price of $360.73 implies a valuation ratio of 21.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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