Financial Stocks Show Resilience Amid Macro Challenges

In a positive turn, financial stocks are stabilizing as the Federal Reserve cuts interest rates. Investing in resilient financial stocks, like S&P Global, American Express, and Nu Holdings, may prove profitable in the long run.

Date: 01-03-2025

AI Rating: 7

Overall Market Outlook: The report indicates that financial stocks, which previously suffered due to various macroeconomic challenges including inflation and rising interest rates, are showing signs of recovery. With the Federal Reserve expected to continue cutting interest rates, there are potential opportunities for recovery in this sector.

S&P Global: This company has achieved impressive revenue growth, with a compound annual growth rate (CAGR) of 16% from 2019 to 2024, alongside an EPS growth of 8%. Although profits dipped during 2022 and 2023, the future looks bright with a projected revenue CAGR of 7% and an EPS CAGR of 14% from 2024 to 2027 as interest rates decline.

American Express: This company has demonstrated solid revenue and EPS growth of 10% and 12% CAGR respectively, from 2019 to 2024. The resilience of its business model, unique to high-income customers, allows it to mitigate economic downturns effectively. Projections for 2024 to 2027 suggest continued revenue growth of 8% CAGR and 12% for EPS.

Nu Holdings: This financial technology company has shown remarkable growth in its customer base and profitability, with a revenue CAGR of 89% from 2021 to 2024. Its profitability and doubling of net income in 2024 indicate strong fundamentals. Future projections remain equally bright, with expected revenue and EPS growth at CAGR of 29% and 38% respectively from 2024 to 2026.

Overall, the report highlights a significant opportunity for investors, especially with S&P Global, American Express, and Nu Holdings as resilient stocks in the financial sector. The projected growth rates suggest potential continued profitability amidst past challenges posed by market conditions.

Stocks: SPGI AXP NU