In this article, we will look at the 10 High Growth Financial Stocks To Invest In.
Financial Services Sector Outlook 2025
In October 2024, Deloitte released its banking and capital market outlook 2025. The report highlights that bank leaders are experiencing uncertainty about how economic conditions will evolve during the year. While inflation has decreased and interest rates are falling, concerns remain regarding sluggish economic growth, geopolitical tensions, and regulatory challenges that could affect bank performance. As per the report the US economy has outperformed expectations in 2024 with GDP growth estimated at 2.7%. However, this growth momentum is expected to slow down in 2025, with GDP growth anticipated to decelerate to 1.5% under a baseline scenario. There is potential for slightly higher growth at 1.9% if productivity increases due to technological advancements. However, a pessimistic scenario could result in growth as low as 1.0% if inflation remains high and geopolitical issues escalate.
The report highlighted that consumer spending will be tested in 2025, particularly as total consumer debt has reached an all-time high of $17.7 trillion as of mid-2024. Moreover, companies are also experiencing declining cash reserves and increasing debt maturity, which could impact their financial stability and borrowing capacity moving forward. On top of this, the Federal Reserve is also expected to implement several rate cuts in 2025, which will help alleviate some pressures on consumers but might not be enough to reduce deposit costs for banks.
As per Deloitte, the primary challenge for banks will be achieving sustainable growth amidst these economic headwinds. Executives will need to make strategic decisions regarding interest income strategies as net interest income is projected to decline due to high deposit costs. We have also covered the financial market outlook by Fidelity Investment in 7 Most Undervalued Financial Stocks To Buy According To Analysts, here’s an excerpt from the article:
According to Fidelity’s report, the prospects for the financial industry in 2025 seem promising, backed by positive economic expansion in the U.S. The Fed’s rate reduction in the second half of 2024 will improve confidence and lower credit risk. This will ultimately boost lending and deposits while reducing net interest margins.
In 2025, financial services are going to be much more advanced, driven by AI. According to IBM’s 2024 report, Generative AI is revolutionizing financial services by enhancing customer satisfaction, bringing new features in risk management, and personalized financial solutions. Deloitte’s 2025 investment management outlook projects AI and the changing digital landscape to massively impact the investment management industry in 2025.
With that let’s take a look at the 10 high-growth financial stocks to invest in.
A view of a busy banking hall, customers engaging with banking staff to conduct their financial transactions.
Our Methodology
To curate the list of 10 high-growth financial stocks to invest in, we used the Finviz stock screener and Seeking Alpha. Using the screener we conducted our initial research to get an aggregated list of financial stocks that have grown their 5-year revenue by more than 20%. Next, we cross-checked the 5-year revenue growth from Seeking Alpha and ranked the stocks in ascending order of the number of hedge fund holders sourced from Insider Monkey’s third-quarter hedge funds database.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 High-Growth Financial Stocks To Invest In
10. SouthState Corporation (NYSE:SSB)
5-Year Revenue Growth: 21.79%
Number of Hedge Fund Holders: 20
SouthState Corporation (NYSE:SSB) is a financial services company that offers various banking products including deposit accounts, loans, and credit services. The company also provides wealth management services, commercial banking, and mortgage solutions. It operates in several states including Florida, Texas, Georgia, Alabama, Virginia, and the Carolinas.
On January 27, Gary Tenner, an analyst at D.A. Davidson maintained a Buy rating on the stock, while keeping his price target at $125. During the fiscal fourth quarter of 2024, SouthState Corporation (NYSE:SSB) experienced positive changes characterized by the Federal Reserve’s decision to cut rates. After the rate cut in September, the company saw an increase in customer deposits across all regions, even with reduced deposit rates. This growth was partly seasonal, influenced by municipal deposits during the tax collection period. Excluding a decline in brokered certificates of deposit (CDs), customer deposits grew by 9% on an annualized basis.
As a result, the bank reported a 6% year-over-year increase in revenue for the full year, contributing to a 9% rise in pre-provision revenue for the quarter. In a recent development, SouthState Corporation (NYSE:SSB) has received regulatory approval for its acquisition of Independent Financial, which closed on January 1. This acquisition aligns with the bank’s strategy to expand in high-growth areas like Florida, Texas, and the Carolinas. It is one of the high-growth financial stocks to invest in now.
9. Grupo Financiero Galicia S.A. (NASDAQ:GGAL)
5-Year Revenue Growth: 83.49%
Number of Hedge Fund Holders: 20
Grupo Financiero Galicia S.A. (NASDAQ:GGAL) is a major financial services holding company based in Argentina. It primarily operates through its subsidiaries, with Banco Galicia being the most significant one. The company provides a wide range of financial services, including banking, savings, credit, investment, and insurance. It aims to strengthen its position as one of Argentina’s leading financial service providers while ensuring Banco Galicia remains a key player in the banking sector.
In December, Jorge Kuri, an analyst at Morgan Stanley upgraded the stock from Underweight to Overweight with a price target of $92. The analyst believes that the positive policy reforms from the Argentinian government are likely to stabilize the macroeconomic conditions in the country, subsequently helping Grupo Financiero Galicia S.A. (NASDAQ:GGAL) in the long run. The company faced significant challenges in the fiscal third quarter of 2024. It reported a net income of Ps.83,656 million, which decreased 47% year-over-year. The decline in net income was primarily due to a substantial drop in the operating result, which fell to Ps.436,230 million, representing a 50% decrease from the third quarter of 2023.
However, management remains confident in long-term growth and has strategically acquired 99.99% of HSBC Bank Argentina and related entities. This significantly enhances its presence in the Argentine banking sector. It is one of the high-growth financial stocks to invest in now.
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