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 10.9% return has trailed the S&P 500 by 10.1 percentage points.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Taking that into account, here is one financials stock poised to generate sustainable market-beating returns and two best left ignored.

Two Financials Stocks to Sell:

Credit Acceptance (CACC)

Market Cap: $4.93 billion

Founded in 1972 by Donald Foss to serve customers overlooked by traditional lenders, Credit Acceptance (NASDAQ: CACC) provides auto financing solutions that enable car dealers to sell vehicles to consumers with limited or impaired credit histories.

Why Should You Dump CACC?

1. Annual revenue growth of 4.1% over the last five years was below our standards for the financials sector
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 5.4% annually while its revenue grew
3. High debt-to-equity ratio of 3.9× shows the firm carries too much debt relative to shareholder equity, increasing bankruptcy risk

Credit Acceptance is trading at $445 per share, or 11.1x forward P/E. To fully understand why you should be careful with CACC, check out our full research report (it’s free for active Edge members).

Nelnet (NNI)

Market Cap: $4.67 billion

Starting as a student loan servicer in the 1970s and evolving through the changing landscape of education finance, Nelnet (NYSE: NNI) provides student loan servicing, education technology, payment processing, and banking services while managing a portfolio of education loans.

Why Are We Hesitant About NNI?

1. Earnings per share were flat over the last two years while its revenue grew, showing its incremental sales were less profitable

At $129.05 per share, Nelnet trades at 16x forward P/E. Dive into our free research report to see why there are better opportunities than NNI.

One Financials Stock to Buy:

Morningstar (MORN)

Market Cap: $8.73 billion

Founded in 1984 by Joe Mansueto with just $80,000 in personal savings, Morningstar (NASDAQ: MORN) provides independent investment data, research, and analysis tools that help investors, advisors, and institutions make informed financial decisions.

Why Are We Backing MORN?

1. Offerings and unique value proposition resonate with customers, as seen in its above-market 12.3% annual sales growth over the last five years
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 131% exceeded its revenue gains over the last two years
3. ROE punches in at 15.6%, illustrating management’s expertise in identifying profitable investments

Morningstar’s stock price of $212.31 implies a valuation ratio of 20.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. 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-micro-cap company Kadant (+351% 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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