Financial firms serve as the backbone of the economy, providing essential services from lending and investment management to risk management and payment processing. Market leaders have certainly capitalized on a favorable backdrop to boost profitability, helping fuel a 7.5% gain for the industry over the past six months. This performance has closely followed the S&P 500.
Nevertheless, investors should tread carefully as many firms are cyclical due to their leverage and exposure to regulatory changes. With that said, here are three financials stocks boasting durable advantages.
State Street (STT)
Market Cap: $50.59 billion
Dating back to 1792 when Boston's Long Wharf was the center of global shipping and trade, State Street (NYSE: STT) provides custody, investment management, and other financial services to institutional investors like pension funds, asset managers, and central banks worldwide.
Why Are We Positive on STT?
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- ROE of 10.4% shows management can invest its resources competently
State Street is trading at $185 per share, or 12.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Charles Schwab (SCHW)
Market Cap: $183 billion
Founded in 1971 as a disruptive force challenging Wall Street's high fees and limited access, Charles Schwab (NYSE: SCHW) is a wealth management and brokerage firm that provides investment services, banking, and financial advice to individual investors and independent advisors.
Why Will SCHW Beat the Market?
- Annual revenue growth of 18.6% over the past two years was outstanding, reflecting market share gains this cycle
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 40.3% exceeded its revenue gains over the last two years
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
At $105 per share, Charles Schwab trades at 14.6x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Evercore (EVR)
Market Cap: $12.4 billion
Founded in 1995 as a boutique advisory firm focused on independence and client trust, Evercore (NYSE: EVR) is an independent investment banking firm that provides strategic advisory, capital markets, and wealth management services to corporations, financial sponsors, and high-net-worth individuals.
Why Should You Buy EVR?
- Impressive 33.9% 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 62% annually, topping its revenue gains
- Industry-leading 32.2% return on equity demonstrates management’s skill in finding high-return investments
Evercore’s stock price of $320.56 implies a valuation ratio of 16.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
