Top 4 Financial Stocks to Buy on Wall Street in 2024

Changing consumer preferences and the adoption of technology are boosting the growth prospects of the financial industry. In order to improve flexibility and drive client satisfaction, financial companies are placing a high priority on user-centric design and tailored services, thereby enhancing the appeal of financial services.

Amid this backdrop, investors could consider buying fundamentally strong financial stocks, Visa Inc. (V), American Express Company (AXP), Broadridge Financial Solutions, Inc. (BR), and Navient Corporation (NAVI).

Before diving deeper into the fundamentals of these stocks, let’s understand what’s shaping the industry’s prospects.

A wide range of products and services are included in financial services, such as checking and savings accounts, tax accounting, mortgage loans, credit cards, consumer loans, insurance, investment products, and payment systems. The growing use of smartphones and the proliferation of the Internet has significantly boosted the demand for these financial services to be accessible online.

Financial companies are leveraging the power of cutting-edge technologies like artificial intelligence, machine learning, and big data analytics to drive deeper insights into consumer behavior, offer personalized services and tailored products, boost efficiency and speed, and provide overall better customer experiences.

Technology has enabled financial services companies to break geographical barriers and provide much-needed convenience to users through digital payments, mobile banking, signing up for any services, access to easy credit, etc. The global financial services industry is expected to grow at a CAGR of 6% until 2032.

For financial organizations, the growing trend toward digital payments and online transactions presents significant development opportunities. The global consumer finance industry is projected to grow at a CAGR of 7.1% to reach $1.96 trillion by 2029.

Furthermore, the financial sector will likely experience significant changes, such as the incorporation of generative AI, which will enable better risk assessment, generate deeper insights from data, enhance fraud detection, etc. Generative AI in financial services is expected to grow at a CAGR of 28.1% to reach $9.48 billion by 2032.

Keeping these factors in mind, let’s dive deeper into the fundamentals of the four featured stocks.

Visa Inc. (V)

V operates as a payment technology company globally. It offers VisaNet, credit, debit, and prepaid card products, tap to pay, tokenization, and click to pay services, Visa Direct, Visa B2B Connect, Visa Cross-Border Solution, and Visa DPS.

In terms of the trailing-12-month Return on Total Capital, V’s 23.05% is 261% higher than the 6.39% industry average. Likewise, its 19.09% trailing-12-month Return on Total Assets is substantially higher than the industry average of 1.16%. Furthermore, the stock’s 0.37x trailing-12-month asset turnover ratio is 78.7% higher than the industry average of 0.21x.

For the fourth quarter ended September 30, 2023, V’s net revenues increased 10.6% year-over-year to $8.61 billion. Its non-GAAP net income rose 17.7% year-over-year to $4.82 billion. The company’s operating income increased 9.1% over the prior year quarter to $5.55 billion. Also, its non-GAAP EPS came in at $2.33, representing an increase of 20.7% year-over-year.

Street expects V’s EPS and revenue for the quarter ended December 31, 2023, to increase 7.3% and 7.7% year-over-year to $2.34 and $8.55 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 20.9% to close the last trading session at $263.33.

V’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

Within the Consumer Financial Services industry, it is ranked #6 out of 48 stocks. It has an A grade for Quality and a B for Momentum, Stability, and Sentiment. To see the other ratings of V for Growth and Value, click here.

American Express Company (AXP)

AXP provides charge and credit payment card products and travel-related services worldwide. The company operates through three segments: Global Consumer Services Group, Global Commercial Services, and Global Merchant and Network Services. Its products and services include payment and financing products, network services, accounts payable expense management products and services, etc.

In terms of the trailing-12-month Return on Common Equity, AXP’s 30.80% is 163.4% higher than the 11.69% industry average. Likewise, its 3.20% trailing-12-month Return on Total Assets is 175.9% higher than the industry average of 1.16%. Furthermore, the stock’s 3.04% trailing-12-month CAPEX/Sales is 52.2% higher than the industry average of 2%.

For the third quarter that ended September 30, 2023, AXP’s total revenues net of interest expense increased 13% year-over-year to $15.38 billion. Its net interest income grew 34% from the year-ago quarter to $3.44 billion. Also, the company’s net income rose 30.4% from the prior year’s period to $2.45 billion. In addition, its earnings per common share came in at $3.30, up 33.6% over the prior-year quarter.

Analysts expect AXP’s revenue and EPS for the quarter ended December 31, 2023, to increase 12.5% and 28.6% year-over-year to $15.95 billion and $2.66, respectively. Over the past three months, the stock has gained 25.1% to close its last trading session at $186.77.

AXP’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.

AXP has a B grade for Momentum, Sentiment, and Quality. It is ranked #10 in the Consumer Financial Services industry. In addition to the POWR Ratings highlighted above, you can see AXP’s ratings for Growth, Value, and Stability here.

Broadridge Financial Solutions, Inc. (BR)

BR provides investor communications and technology-driven solutions for the financial services industry. It operates through two segments: Investor Communication Solutions and Global Technology and Operations.

On December 13, 2023, BR announced that TMF Group enhanced its private debt and Collateralised Loan Obligation (CLO) services by adopting BR's Sentry PM, a cloud-based private debt and CLO portfolio management solution.

The adoption positions BR to support TMF Group's business scalability, reduce operational risks, and facilitate the launch of a new CLO administration service in 2024, contributing positively to BR’s role in the fintech landscape.

In terms of the trailing-12-month EBITDA margin, BR’s 23.08% is 68.3% higher than the 13.72% industry average. Likewise, its 12.86% trailing-12-month levered FCF margin is 114.9% higher than the industry average of 5.98%. Furthermore, the stock’s 33.42% trailing-12-month Return on Common Equity is 173.2% higher than the industry average of 12.23%.

BR’s revenues for the first quarter ended September 30, 2023, increased 11.5% year-over-year to $1.43 billion. Its adjusted operating income increased 32.8% year-over-year to $199.30 million. The company’s adjusted net earnings increased 30% over the prior year quarter to $129.60 million. Also, its adjusted EPS came in at $1.09, representing an increase of 29.8% year-over-year.

For the quarter ended December 31, 2023, BR’s revenue is expected to increase 8.3% year-over-year to $1.40 billion. Its EPS for the quarter ending March 31, 2024, is expected to increase 12.3% year-over-year to $2.30. It topped the consensus EPS estimates in each of the trailing four quarters, which is impressive. Over the past year, the stock has gained 45.9% to close the last trading session at $200.

It’s no surprise that BR has an overall rating of B, which translates to a Buy in our POWR Ratings system.

It is ranked #8 out of 102 stocks in the Financial Services (Enterprise) industry. It has an A grade for Momentum and a B for Growth and Sentiment. Click here to see the additional ratings of BR for Value, Stability, and Quality.

Navient Corporation (NAVI)

NAVI provides technology-enabled education finance and business processing solutions for education, health care, and government clients in the United States. It operates through three segments: Federal Education Loans, Consumer Lending, and Business Processing.

In terms of the trailing-12-month gross profit margin, NAVI’s 100% is 65.6% higher than the 60.37% industry average. Likewise, its 27.85% trailing-12-month net income margin is 10.1% higher than the industry average of 25.31%. Furthermore, the stock’s 12.30% trailing-12-month Return on Common Equity is 5.2% higher than the industry average of 11.69%.

For the third quarter ended September 30, 2023, NAVI’s total interest income increased 32.8% year-over-year to $1.17 billion. Its net interest income rose 21% year-over-year to $291 million. The company’s net income came in at $79 million. Also, its EPS came in at $0.65.

Over past nine months, the stock has gained 11.6% to close the last trading session at $17.75.

NAVI’s solid prospects are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.

Within the same industry, it is ranked #15. It has a B grade for Value, Momentum, and Quality. To see the other ratings of NAVI for Growth, Stability, and Sentiment, click here.

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V shares were trading at $263.57 per share on Wednesday afternoon, up $0.24 (+0.09%). Year-to-date, V has gained 1.24%, versus a -0.05% rise in the benchmark S&P 500 index during the same period.

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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