Top Financial Stocks for December 2021

The financial sector is comprised of companies that offer services including loans, savings, insurance, payment services, and money management for individuals and firms. Financial sector stocks include a wide range of companies involved in retail and commercial banking, accounting, insurance, asset management, credit cards, and brokerage. Well-known companies in the sector include Wells Fargo Co. (WFC), Goldman Sachs Group Inc. (GS), and Morgan Stanley (MS).

Financial stocks, represented by the Financial Select Sector SPDR ETF (XLF), have outperformed the broader market, with a total return of 46.9% compared to the iShares Russell 1000 ETF’s (IWB) total return of 33.5% over the past 12 months. These performance numbers and all statistics in the tables below are as of Nov. 18, 2021.

Here are the top three financial stocks with the best value, the fastest growth, and the most momentum.

These are the financial stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

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• UWM Holdings Corp. UWM Holdings is a holding company that, through its subsidiaries, engages in the origination, sale, and servicing of residential mortgage loans. The company reported a significant year-over-year (YOY) decline in net income for Q3 2021, due in part to a major drop in fair value of mortgage servicing rights (MSRs). The quarter ended Sept. 30, 2021. At the same time, originations rose 16% to a company record.
• Santander Consumer USA Holdings Inc.: Santander Consumer USA Holdings is a holding company that, through its subsidiaries, offers financing for new and used cars, auto refinancing, and other services. On Nov. 19 the company announced a quarterly cash dividend of $0.22 per common share to shareholders of record as of Nov. 29. The dividend is payable on Dec. 9, 2021.
• Voya Financial Inc.: Voya Financial offers investment, insurance, and retirement planning services. The company provides asset accumulation, protection, and distribution products and services to individuals and institutions.

These are the top financial stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

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• Upstart Holdings Inc.: Upstart Holdings is a holding company whose subsidiaries offer a cloud-based artificial intelligence lending platform to make credit more available. The platform also helps bank partners to reduce the risk of lending. Both net income attributable to common shareholders and total revenue more than tripled YOY for Q3 2021, ended Sept. 30.
• Franklin Resources Inc.: Franklin Resources offers investment advisory services to mutual fund, retirement, and institutional investors. The company manages a broad range of asset classes, including global equity, municipal fixed income, hedge funds, and alternative investments.
• Athene Holding Ltd.: Athene Holding is an insurance holding company that issues, reinsures, and acquires retirement savings products through subsidiaries. The company serves customers around the world. The company reported Q3 2021 financial results for the quarter ended Sept. 30 on Nov. 3. Net income rose 12.4%. on a 167% increase in total revenues as gross organic inflows rose to a record $11.9 billion. The company said the quarterly performance reflected its diversified funding channels, and in particular the institutional side of the business in funding agreements and pension group annuities.

These are the financial stocks that had the highest total return over the past 12 months.

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• Signature Bank: Signature Bank is a full-service commercial bank. The company provides investment, brokerage, asset management, and insurance products as well as various commercial lending services and other specialty-finance lending solutions.
• Blackstone Inc.: Blackstone is a global investment firm offering a range of investment vehicles that are focused on private equity, real estate, public debt and equity, growth equity, non-investment grade credit, real assets, and other types of assets. It serves both institutional investors and individuals. On Nov. 18, womenswear brand SPANX Inc. announced that funds managed by Blackstone had completed a majority investment in SPANX at a valuation of $1.2 billion. Additional new investors in the deal included Oprah Winfrey and Reese Witherspoon.
• Western Alliance Bancorp: Western Alliance Bancorp is a bank holding company. Through its subsidiaries, the company provides a variety of deposit, lending, treasury management, international banking, and other banking services.

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