Financial firms serve as the backbone of the economy, providing essential services from lending and investment management to risk management and payment processing. Still, investors are uneasy as companies face challenges from an unpredictable interest rate and inflation environment. These doubts have caused the industry to lag recently as financials stocks have collectively shed 4.6% over the past six months. This drop is a noticeable divergence from the S&P 500’s 11% return.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. On that note, here is one resilient financials stock at the top of our wish list and two we’re steering clear of.
Two Financials Stocks to Sell:
Sixth Street Specialty Lending (TSLX)
Market Cap: $1.64 billion
Originally launched as TPG Specialty Lending before rebranding in 2020, Sixth Street Specialty Lending (NYSE: TSLX) is a business development company that provides customized financing solutions to middle-market companies across various industries.
Why Is TSLX Risky?
- Annual sales declines of 3.7% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
Sixth Street Specialty Lending is trading at $17.42 per share, or 10.3x forward P/E. To fully understand why you should be careful with TSLX, check out our full research report (it’s free).
Sallie Mae (SLM)
Market Cap: $4.08 billion
Originally created as a government-sponsored enterprise before privatizing in 2004, Sallie Mae (NASDAQ: SLM) is a financial services company that provides private education loans, savings products, and educational resources to help students and families pay for college.
Why Are We Wary of SLM?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 3.1% annually
At $21.35 per share, Sallie Mae trades at 8.4x forward P/E. Read our free research report to see why you should think twice about including SLM in your portfolio.
One Financials Stock to Watch:
Raymond James (RJF)
Market Cap: $28.56 billion
Founded in 1962 and headquartered in St. Petersburg, Florida, Raymond James Financial (NYSE: RJF) is a diversified financial services company that provides wealth management, investment banking, asset management, and banking services to individuals and institutions.
Why Are We Fans of RJF?
- Annual revenue growth of 11.6% over the last five years beat the sector average and underscores the unique value of its offerings
- Performance over the past five years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
Raymond James’s stock price of $146.58 implies a valuation ratio of 11.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
