10 Best Financial Services Stocks to Buy Now

Published December 3, 2021 at 11:01 am EST Updated August 19, 2026 at 5:44 am EDT

In this article, we discuss the 10 Best Financial Services Stocks to Buy Now.

Financial stocks suffered a lot due to the pandemic-driven recession as global stock markets declined over 30% after the respective governments issued restrictions. As stated by KPMG International, the STOXX North America 600 banks index suffered a significant decline of 31.23% in the first three months of the pandemic. However, the sector is getting back on its feet, especially as major financial services companies announced positive Q3 earnings and are moving towards their biggest annual gain since 1997, as mentioned by Bloomberg.

During the second quarter of 2021, the finance sector attracted over $32 billion in investments, as investors regained their confidence due to the economic recovery, as reported by Wall Street Journal. Also, the financial sector is all set to reach the mark of $28.5 trillion in value by 2025, with a current value of $22.5 trillion, growing at a CAGR of 9.9%. This being said, the popularity of financial services stocks is stoked up by the ongoing digital transformation. Financial technology, more commonly known as fintech, is accelerating the process of digital payments, a practice exercised during the pandemic. Organizations and individuals around the world shifted their focus to online banking. This comes in line with a report published by Global X, which states that the number of active online banking users reached 1.9 billion in 2020 and is projected to reach 2.5 billion by 2024.

According to the latest report of the Federal Deposit Insurance Corporation (FDIC), the institutions insured by the agency reported a net income of over $6.5 billion in Q3 of 2021, presenting a 35.9% growth from the prior-year quarter. The report further acknowledged the banking sector’s role in economic growth. The Dow Jones U.S. Financial Services Index delivered a 33.6% return to shareholders in the past year, outperforming a 24.7% return of S&P 500 during the same period. Due to the solid performance in 2021, investors now turn towards financial stocks owing to their contribution to the nation’s economy, according to CNBC’s Jim Cramer. He further established that the recent market rally was due to the surge seen in bank stocks.

Some of the notable financial services stocks include JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC), The Goldman Sachs Group, Inc. (NYSE:GS), and Bank of America Corporation (NYSE:BAC), among others.

Our Methodology:

Let’s analyze our list of the best financial services stocks to buy now. The stocks mentioned below belong to the banking and finance sector. For this list, we considered the analysts’ ratings and future growth potential of the companies. Along with this, the hedge fund sentiment was measured using data from 867 hedge funds tracked by Insider Monkey in Q3.

Best Financial Services Stocks to Buy Now

10. Focus Financial Partners Inc. (NASDAQ:FOCS)

Number of Hedge Fund Holders: 16

Focus Financial Partners Inc. (NASDAQ:FOCS) is an American investment adviser company which provides services related to finances and investment management.

At the end of Q3, 16 hedge funds in Insider Monkey’s database reported owning stakes in Focus Financial Partners Inc.. The total value of these stakes is over $101 million. Among these hedge funds, Soros Fund Management held the largest stake in Focus Financial Partners Inc. in Q3, worth over $40 million.

Focus Financial Partners Inc. announced its Q3 results on November 4 and reported a 28.8% growth in its organic revenue. The company’s EPS for the quarter stood at $0.98, which beat analysts’ estimates by $0.02. Following the company’s earnings beat in Q3, BMO Capital raised its price target on Focus Financial Partners Inc. to $77, while maintaining an Overweight rating on the shares.

Like JPMorgan Chase & Co., Wells Fargo & Company, The Goldman Sachs Group, Inc., and Bank of America Corporation, Focus Financial Partners Inc. is one of the notable stocks in 2021.

Wasatch Global Investors mentioned Focus Financial Partners Inc. in its Q2 2021 investor letter. Here is what the firm has to say:

“We’re excited about several new portfolio holdings in the Fund. For example, during the second quarter, we purchased Focus Financial Partners, Inc. (FOCS). Focus Financial provides holistic wealth management services. The company offers financial planning, asset allocation, asset management and tax preparation. What we like most about Focus Financial is that the company is taking ownership stakes in independent, ultra-high-net worth investment advisory firms around the world. This is attractive for the advisory firms because they: (1) get to continue operating with significant independence; (2) gain access to an expanded menu of top-notch products and services for clients; (3) get to maintain their legacy as a high quality firm; and (4) receive immediate cash in exchange for giving up some ownership. Focus Financial has seen extremely strong revenues and earnings because it has the infrastructure to rapidly grow the investment advisory firms that were started by talented entrepreneurs. Of all businesses, advisory firms achieve some of the best economies of scale due to the fact that fixed costs pale in comparison to asset-based revenues.”

9. Franklin Resources, Inc. (NYSE:BEN)

Number of Hedge Fund Holders: 28

Franklin Resources, Inc. (NYSE:BEN) is an American investment management company that also provides related financial services to its consumers. On November 2, the stock surged 6% after Citigroup noted the company’s improved underlying fundamentals. The firm lifted its price target on Franklin Resources, Inc. to $43, while upgrading the shares to Buy.

In its fiscal Q4 results, Franklin Resources, Inc. posted an EPS of $1.26, beating the consensus by $0.40. The company earned $2.18 billion in revenues, presenting a 27.5% growth from the prior-year quarter. Since the start of 2021, Franklin Resources, Inc. delivered a 34.6% return to shareholders, while its 12-month gains stood at 46.6%.

As of Q3 2021, Insider Monkey’s database reported 28 hedge funds holding stakes in Franklin Resources, Inc., compared with 30 in the previous quarter. The total value of these stakes is roughly $360 million, up significantly from $205.1 million in Q2 of 2021.

8. Comerica Incorporated (NYSE:CMA)

Number of Hedge Fund Holders: 31

Even though Comerica Incorporated (NYSE:CMA) saw a reduction in the number of hedge funds holding stakes in the company, the stock surged as the company announced solid Q3 earnings. Comerica Incorporated reported a 2% quarter-over-quarter growth in net interest income, about 3% higher than the consensus.

Ken Griffin’s Citadel Investment Group was the largest stakeholder of Comerica Incorporated in Q3, owning over 1.8 million shares. In addition to this, 31 hedge funds tracked by Insider Monkey reported owning stakes in the company in Q3, down from 33 in the previous quarter. The total worth of these stakes is roughly $645 million, up from $547 million in Q2.

Wall Street analysts presented a positive outlook on Comerica Incorporated recently. Both Citigroup and RBC Capital lifted their price targets on the stock to $100 and $95, respectively. The latter’s analyst appreciated the company’s solid fundamental trends. In the past year, Comerica Incorporated gained 61.5%.

Like JPMorgan Chase & Co., Wells Fargo & Company, The Goldman Sachs Group, Inc., and Bank of America Corporation, Comerica Incorporated is a notable finance stocks to watch in 2021 and beyond.

7. The Charles Schwab Corporation (NYSE:SCHW)

Number of Hedge Fund Holders: 59

The Charles Schwab Corporation (NYSE:SCHW), an American financial services company, reported a 5% growth in client assets in October, compared with the previous month. With the significant growth in customers over the years, The Charles Schwab Corporation remains one of the best financial services stocks to buy now.

As per Insider Monkey’s Q3 data, The Charles Schwab Corporation suffered a decline in the number of hedge funds having stakes in the company. On the whole, 59 hedge funds tracked by Insider Monkey reported owning stakes in the company in Q3.

This October, Morgan Stanley appreciated the company’s accelerated customer growth and raised its price target on The Charles Schwab Corporation to $115 while maintaining an Overweight rating on the shares. The firm’s analyst also expects the company’s EPS to reach $7 by fiscal 2026. As of the close of December 2, The Charles Schwab Corporation is up 45.05% year to date.

Lakehouse Capital mentioned The Charles Schwab Corporation in its Q2 2021 investor letter. Here is what the firm has to say:

“Charles Schwab is not a household name in Australia but it is in the US where it is the largest discount broker with more than 32 million brokerage accounts, 2 million corporate retirement plans, and total client assets of US$7.4 trillion. Schwab’s shares performed extremely well during the year thanks to a confluence of factors including a strong stock market with the S&P 500 up 39% year-on-year, the company’s recent merger with industry heavyweight TD Ameritrade, and expectations that interest rate income would grow as the US economy gained steam.

Two other important contributors to Schwab’s year, which were a mix of cyclical and structural, were an increase in net new accounts and increased trading activity. We view these as cyclical in the sense that markets are performing very well and that retail investors have been bored and emboldened during the American lockdowns, however, also structural because Schwab’s shift to $0 commissions on equity trades has permanently reduced a barrier to trading for investors with smaller accounts. We also note that, while brokerage activity is cyclical, the average brokerage account itself is very sticky — we estimate normalised annual retention rates for accounts of better than 93% — and that the average client assets per account grow over time thanks to asset growth and clients collectively being net savers.

Schwab makes for an excellent natural hedge for the Fund as Schwab tends to perform well when interest rates increase, which is generally negative for the rest of the portfolio. And the position did its job for us by increasing during a rising interest rate environment, enabling us to harvest much of our gains from Schwab and redeploy them to shares of other growth companies that had gotten cheaper in response to higher rates. We’re mindful of the run in the shares and the cyclical nature of the business but comfortable keeping a small position for now given Schwab’s natural hedging dynamics, extremely loyal customers, and an industry-leading position in a growing market.”

6. Morgan Stanley (NYSE:MS)

Number of Hedge Fund Holders: 65

Morgan Stanley (NYSE:MS) is an American investment bank and financial services company, headquartered in New York. Recently, the company announced the development of a private share offering program to allow its clients to invest in private companies, with an admission price of approximately $20 million. The program is expected to go live next year.

In Q3, Morgan Stanley reported solid earnings, mainly driven by acquisitions. The company’s institutional securities net revenue rose to $7.5 billion, from $6.1 billion during the same period last year. Acknowledging the strong quarterly earnings of Morgan Stanley, Citigroup raised its price target on the stock in October to $105, with a Neutral rating on the shares.

At the end of Q3 2021, 65 hedge funds tracked by Insider Monkey reported owning stakes in Morgan Stanley, compared with 69 in the previous quarter. The total value of these stakes is roughly $5 billion. Of these hedge funds, Eagle Capital Management held the largest stake in the company, worth $1.4 billion, in Q3.

Morgan Stanley is also gaining ground among investors in the banking sector like JPMorgan Chase & Co., Wells Fargo & Company, The Goldman Sachs Group, Inc., and Bank of America Corporation.

In its Q2 2021 investor letter, ClearBridge Investments mentioned Morgan Stanley among other stocks. Here is what the firm has to say:

“The Strategy also benefited from strong showings from financials holdings such as recent addition Morgan Stanley, a leading bank holding company offering a variety of financial services worldwide, and one of the largest broker-dealers, investment banks and wealth managers in the U.S. Morgan Stanley has been a leader in helping direct capital to address global sustainability challenges. Its sustainability efforts include capital markets actions such as issuing green bonds and it was early in its support for sustainability in investing and its concern for the environment. Morgan Stanley reported a great quarter with record revenues and strength across the businesses as it works to integrate and find synergies with recent acquisition E*TRADE. Following stress tests for banks, Morgan Stanley increased its dividend and share repurchase plan more than expected.”

5. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 72

In Q3, Bank of America Corporation’s organic customer growth momentum reached pre-pandemic levels as its deposit balances exceeded $1 trillion for the first time, presenting a 16% growth from the prior-year quarter. Due to the strong deposit growth and improving fundamentals, Bank of America Corporation remains one of the best financial services stocks to buy now.

Warren Buffett’s Berkshire Hathaway held a $42.8 billion worth of stake in Bank of America Corporation in Q3, becoming the company’s largest shareholder. Overall, 72 hedge funds in Insider Monkey’s database held stakes in the company in Q3, down from 87 in the previous quarter. The consolidated value of these stakes is over $46.4 billion.

Recently, Piper Sandler lifted its price target on Bank of America Corporation to $53, with an Overweight rating on the shares, highlighting the bank’s recent multiple expansions. As of the close of December 2, the stock’s year-to-date returns stood at 45.99%.

Oakmark Funds mentioned Bank of America Corporation in its Q3 2021 investor letter. Here is what the firm has to say:

“Earlier this year, one of our holdings, Bank of America, announced that it was raising its minimum hourly wage from $15 to $20 and would increase it to $25 by 2025. The company received great press for placing the well-being of its employees above profits. But was it really either/or? Bank of America’s chief human resources officer spoke to the bigger picture: “A core tenet of responsible growth is our commitment to being a great place to work…that includes providing strong pay and competitive benefits to help them and their families, so that we continue to attract and retain the best talent.” Bank of America understood that engaged, high-caliber employees are more productive, less prone to turnover and, therefore, less expensive in the long run. Increasing the pay for employees wasn’t elevating employees above shareholders; it was the right thing to do for employees and for shareholders.

If an increase to $20 was good, why stop there? Why not $50 per hour? Because the benefits the business receives at $50 don’t justify the expense. The bank would no longer be able to price its products competitively and would lose business. The employees would “win” in the short term, but eventually the lost business would lead to job cuts, meaning both employees and shareholders would lose. The negative effects of stakeholder overreach are no different than when CEOs overreach to inflate short-term profits. Both hurt shareholders and stakeholders.”

4. The Goldman Sachs Group, Inc. (NYSE:GS)

Number of Hedge Fund Holders: 74

As per Insider Monkey’s data for Q3, the hedge fund interest is increasing in The Goldman Sachs Group, Inc., as 74 hedge funds tracked by Insider Monkey were bullish on the financial services company, up from 61 in the previous quarter. The total value of these stakes is over $5.4 billion.

Recently, The Goldman Sachs Group, Inc. announced the development of an Amazon-backed cloud computing service for investment firms, which will enhance the management services of the firm. Following the bank’s latest strategic developments, Wall Street analysts presented a positive outlook on the stock. Recently, both RBC Capital and Oppenheimer raised their price targets on The Goldman Sachs Group, Inc. to $435 and $576, respectively.

In its Q3 results, The Goldman Sachs Group, Inc. posted a GAAP EPS of $14.93, beating the estimates by $4.89. The bank’s revenue for the quarter stood at $13.6 billion, up 26.3% from the prior-year quarter.

Ariel Investments mentioned The Goldman Sachs Group, Inc. in its Q2 2021 investor letter. Here is what the firm has to say:

“Goldman Sachs Group Inc. (GS) returned +16.45%. Goldman has posted a series of excellent quarterly results. Merger and equity offering activity has been robust with trading profits bolstered by strong capital market volumes. Goldman’s asset management business has also performed well. Regulators recently moved to allow most large investment banks to return capital to shareholders through dividends and share repurchases. Fundamentally, we think Goldman Sachs is attractively priced at approximately 11 times earnings and a very reasonable multiple of book value.”

3. Willis Towers Watson Public Limited Company (NASDAQ:WLTW)

Number of Hedge Fund Holders: 75

Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is a British-American financial service and advisory company. Recently, Wells Fargo ensured its engagement in the company as it works to achieve its financial targets for 2024. The firm set a $280 price target on Willis Towers Watson Public Limited Company, with an Overweight rating on the shares.

At the end of Q3 2021, 75 hedge funds tracked by Insider Monkey held over $5 billion worth of stake in Willis Towers Watson Public Limited Company. In the previous quarter, 70 hedge funds had positions in the company, highlighting a positive hedge fund sentiment in Q3.

In Q3, Willis Towers Watson Public Limited Company earned $2 billion in revenues, up 4% from the prior-year quarter. Moreover, the company’s income from operations was recorded at $1.1 billion, which stood at $66 million during the same period last year.

Vltava Funds mentioned Willis Towers Watson Public Limited Company in its Q3 2021 investor letter. Here is what the firm has to say:

“The second position is much larger and was thrown into our hands by an unexpected turn of events. It is the stock of Willis Towers Watson. This is a British company with roots dating back to 1828. WLTW is the third-largest insurance broker in the world. This is a sector with which we are very familiar, as some time ago we held in our portfolio shares of its slightly larger competitor AON.

It was AON in fact that announced last spring it had agreed to merge with WLTW. In the merger, WLTW shareholders would have received AON shares. As is usually the case with such announcements, investors stepped in to conduct what is known as merger arbitrage. In this particular case, they bought WLTW shares and sold short AON shares in order to profit from the fact that the prices of the two stocks did not yet fully reflect the exchange ratio in the merger. Moreover, merger arbitrage commonly makes extensive use of leverage in order to increase profits.

This summer, however, AON and WLTW jointly announced that they were pulling out of the planned merger because they had not received approval from the US Department of Justice. The regulator had feared that in an already quite concentrated industry, a merger of the second- and third-largest players would restrict competition too much. The immediate reaction to this announcement was, of course, closing of positions from the merger arbitrage. This brought an immediate increase in the price of AON shares and decline in the price of WLTW shares. We saw this as an excellent buying opportunity in WLTW stock. (In addition, WLTW had received a USD 1 billion breakup fee from AON.) Because we knew the industry and the two companies well from earlier years, we were able to react immediately, and a new, very attractive investment appeared in Vltava Fund’s portfolio rather unexpectedly and quickly.

Insurance brokerage is a very good business. Simply put, insurance brokers are intermediaries who sell, find, or negotiate insurance on behalf of a client for a fee. They do not bear the insurance risk themselves and thereby do not risk their own capital. They live from commissions and the fact that this is a large and recurring business. Just to give you a sense of this, I will note, for example, that of the 500 companies in the Fortune Global 500 list, more than 90% are clients of WLTW. The entire industry is very concentrated and has relatively high barriers to entry. WLTW is the third-largest global player, has very high free cash flow, low capital investment requirements, and a very valuable client base. The business as a whole also provides some long-term inflation protection, as the speed at which the volume of total premiums grows follows the speed at which the economy and asset prices grow in nominal terms. I have to say we are very happy that circumstances have passed this investment on to us.”

2. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders: 88

According to Bloomberg, Wells Fargo & Company remains the best performing bank in 2021, surging 62.1%, as of the close of December 2. Due to its strong performance, Odeon Capital upgraded the stock to Buy, highlighting its reasonable valuation.

In its Q3 earnings, Wells Fargo & Company posted a GAAP EPS of $1.17, which beats the analysts’ estimates by $0.17. Moreover, the California-based financial services company reported revenue of $18.8 billion, exceeding expectations by $520 million.

At the end of Q3 2021, 88 hedge funds tracked by Insider Monkey reported owning stakes in Wells Fargo & Company, compared with 94 in the previous quarter. These positions held a consolidated value of over $6.1 billion. Eagle Capital Management was the company’s leading shareholder in Q3, worth over $1.5 billion.

L1 Capital mentioned Wells Fargo & Company in its Q2 2021 investor letter. Here is what the firm has to say:

“Wells Fargo (Long +16%) was the strongest contributor to portfolio performance over the quarter. Wells Fargo shares rallied given a better outlook for bad debts driven by improving employment and house price trends. The company had been very undervalued due to excessive fears around likely bad debts due to the pandemic, the continued regulatory “asset cap” (a punishment that was put in place in 2017 for numerous compliance failures) and an inability to commence buybacks. The share price has subsequently recovered strongly in recent months as the company has progressed its turnaround program under the leadership of the well-regarded CEO, Charles Scharf (former CEO of Visa and BNY Mellon). Wells Fargo is now closer to getting the asset cap lifted and has announced a huge cost out program (US$8b+) as well as an $18b buyback program to be completed over the next 12 months. Wells Fargo shares have rallied more than 50% since we initiated the position in late 2020. Given the strong rally, we elected to exit our position and rotate into stocks with larger valuation upside.”

1. JPMorgan Chase & Co. (NYSE:JPM)

Number of Hedge Fund Holders: 101

JPMorgan Chase & Co. remains one of the best financial services stocks to buy now as its Q3 results showed strong earnings capacity. In Q3, the company reported credit costs net benefit of $1.5 billion, beating the consensus of $17.9 million.

Recently, both Wells Fargo and Barclays raised their price targets on JPMorgan Chase & Co. to $210 and $193, respectively. Since the start of 2021, the stock delivered a 27.8% return to shareholders, while it gained 31.8% in the past year, as of the close of December 2.

The number of hedge funds tracked by Insider Monkey having stakes in JPMorgan Chase & Co. decreased to 101 in Q3, from 108 in the previous quarter. However, the total value of the stakes stood at $5.6 billion, up from $4.9 billion in Q2 2021. Fisher Asset Management was the largest shareholder of JPMorgan Chase & Co. in Q3, owning shares worth $1.1 billion.

Vltava Fund mentioned JPMorgan Chase & Co. in its Q3 2021 investor letter. Here is what the firm has to say:

“While all the previous names could be categorised as founder, continuing, or key shareholders, these last two names fall into the category of hired professional managers. This is actually the most numerous category among the bosses of large companies, but even among them there exist a number of individuals with exceptional long-term track records. In our view, these include also Jamie Dimon and Herman Gref.

We consider JP Morgan to be the strongest, largest, and most profitable bank in the world. It has not always been so, and the fact that it is what it is today can be attributed especially to its CEO Jamie Dimon. Dimon has spent his entire career in banking. He came to JP Morgan in a roundabout way in 2004 after the bank bought Bank One, of which he was CEO at the time. Since early 2006, Dimon has been CEO of the entire JP Morgan.

The quality and strength of JP Morgan under his leadership became fully apparent for the first time in 2008. Not only did JP Morgan help to stabilise the market by taking over the failing Bear Stearns in the spring of that year, but it was the only major US bank that did not require government assistance throughout the Great Financial Crisis and that was highly profitable even in the difficult year of 2008. Today, JP Morgan is even bigger, even more profitable, and even stronger than ever before. Many investors view banks with disdain, but a good bank with good management can be a very good long-term investment. From the time of its merger with Bank One in 2004 through the end of 2020, JP Morgan’s stock has outperformed even the S&P 500 index. The bank has earned a total net profit of USD 330 billion during this period, of which USD 232 billion has been paid out to shareholders in dividends and in share buybacks. I can recommend two books about Jamie Dimon: The House of Dimon and Last Man Standing.”

You can also take a look at 15 Best Financial Stocks to Buy Now and 10 Financial Services Dividend Stocks with Over 4% Yield

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