Financial firms serve as the backbone of the economy, providing essential services from lending and investment management to risk management and payment processing. 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 7.9% gain has fallen behind the S&P 500's 14.3% rise.
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. On that note, here are two financials stocks we think can generate sustainable market-beating returns and one that may face trouble.
One Financials Stock to Sell:
Farmer Mac (AGM)
Market Cap: $1.86 billion
Created by Congress in 1987 to build a bridge between Wall Street and rural America, Farmer Mac (NYSE: AGM) provides a secondary market for agricultural and rural loans, helping lenders increase their liquidity and lending capacity to serve rural America.
Why Are We Cautious About AGM?
- 5.8% annual revenue growth over the last two years was slower than its financials peers
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 7.5% annually
- Debt-to-equity ratio of 19.6× shows the firm has taken on excessive debt, leaving little room for error
Farmer Mac’s stock price of $174.64 implies a valuation ratio of 9.4x forward P/E. Dive into our free research report to see why there are better opportunities than AGM.
Two Financials Stocks to Buy:
Visa (V)
Market Cap: $625.6 billion
Processing over 829 million transactions daily and connecting billions of cards to 150 million merchant locations worldwide, Visa (NYSE: V) operates one of the world's largest electronic payments networks, facilitating secure money movement across more than 200 countries through its VisaNet processing platform.
Why Do We Love V?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 12.9% annual sales growth over the last five years
- Share repurchases have increased shareholder returns as its annual earnings per share growth of 17.9% exceeded its revenue gains over the last five years
- Industry-leading 44.4% return on equity demonstrates management’s skill in finding high-return investments
At $326.90 per share, Visa trades at 25.9x 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.
Enova (ENVA)
Market Cap: $3.37 billion
Pioneering online lending since 2004 with a massive database of over 65 terabytes of customer behavior data, Enova International (NYSE: ENVA) provides online financial services including installment loans and lines of credit to non-prime consumers and small businesses in the United States and Brazil.
Why Will ENVA Outperform?
- Impressive 22.7% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Impressive 22% annual book value per share growth over the last five years indicates it’s building equity value this cycle
Enova is trading at $135.89 per share, or 9.6x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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-small-cap company Comfort Systems (+782% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
