2 Financials Stocks with Competitive Advantages and 1 We Avoid

Barchart·05/22/2026 04:38:22

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 2.9% gain has fallen behind the S&P 500's 10.8% 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 resilient financials stocks at the top of our wish list and one that may face trouble.

One Financials Stock to Sell:

Donnelley Financial Solutions (DFIN)

Market Cap: $987.3 million

Born from the need to navigate increasingly complex financial regulations in the digital age, Donnelley Financial Solutions (NYSE:DFIN) provides software and technology-enabled services that help companies comply with SEC regulations and manage financial transactions and reporting requirements.

Why Does DFIN Fall Short?

1. Annual sales declines of 3.4% for the past five years show its products and services struggled to connect with the market during this cycle
2. Earnings per share lagged its peers over the last five years as they only grew by 8.4% annually

Donnelley Financial Solutions’s stock price of $39.50 implies a valuation ratio of 1.3x trailing 12-month price-to-sales. Read our free research report to see why you should think twice about including DFIN in your portfolio.

Two Financials Stocks to Watch:

S&P Global (SPGI)

Market Cap: $123 billion

Tracing its roots back to 1860 when it published the first railroad industry manual, S&P Global (NYSE:SPGI) provides credit ratings, market intelligence, commodity data, automotive analytics, and financial indices that help investors and businesses make decisions.

Why Is SPGI Interesting?

1. Annual revenue growth of 10.7% over the last two years was above the sector average and underscores its products and services value to customers
2. Share repurchases over the last two years enabled its annual earnings per share growth of 17% to outpace its revenue gains
3. ROE punches in at 19.7%, illustrating management’s expertise in identifying profitable investments

At $417.91 per share, S&P Global trades at 20.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

LendingClub (LC)

Market Cap: $1.82 billion

Pioneering peer-to-peer lending in the US before evolving into a digital bank, LendingClub (NYSE:LC) operates a marketplace that connects borrowers with lenders, offering personal loans, auto refinancing, and banking services.

Why Is LC a Good Business?

1. Impressive 28.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Additional sales over the last two years increased its profitability as the 109% annual growth in its earnings per share outpaced its revenue
3. Adequate return on equity shows management makes decent investment decisions

LendingClub is trading at $15.76 per share, or 8.9x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Stocks We Like Even More

ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.

Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks - FREE. Get Our Strong Momentum Stocks for Free HERE.

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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

This article contains syndicated content. We have not reviewed, approved, or endorsed the content, and may receive compensation for placement of the content on this site. For more information please view the Barchart Disclosure Policy here.