Financial institutions play a critical role, offering everything from consumer banking to wealth management and specialized financial solutions. But worries about economic uncertainty and potential market volatility have kept sentiment in check, and over the past six months, the industry's 8.6% return has trailed the S&P 500 by 4.3 percentage points.
A cautious approach is imperative when dabbling in financials as many are sensitive to economic cycles and regulatory changes. Taking that into account, here are three financials stocks we’re passing on.
MarketAxess (MKTX)
Market Cap: $6.81 billion
Pioneering the shift from phone-based to electronic bond trading since 2000, MarketAxess (NASDAQ: MKTX) operates electronic trading platforms that enable institutional investors and broker-dealers to efficiently trade fixed-income securities like corporate and government bonds.
Why Are We Wary of MKTX?
- Sales trends were unexciting over the last five years as its 5.3% annual growth was below the typical financials company
- Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
At $183.51 per share, MarketAxess trades at 23x forward P/E. Dive into our free research report to see why there are better opportunities than MKTX.
Intercontinental Exchange (ICE)
Market Cap: $92.34 billion
Starting as an energy trading platform in 2000 before acquiring the iconic New York Stock Exchange in 2013, Intercontinental Exchange (NYSE: ICE) operates global financial exchanges, clearing houses, and provides data services and mortgage technology solutions to financial institutions and corporations.
Why Are We Hesitant About ICE?
- Performance over the past five years shows its incremental sales were less profitable, as its 9.3% annual earnings per share growth trailed its revenue gains
Intercontinental Exchange’s stock price of $160.72 implies a valuation ratio of 22.2x forward P/E. Check out our free in-depth research report to learn more about why ICE doesn’t pass our bar.
StoneX (SNEX)
Market Cap: $5.10 billion
Originally known as INTL FCStone until its 2020 rebranding, StoneX Group (NASDAQ: SNEX) provides a global financial services network connecting companies, traders, and investors to markets through clearing, execution, and advisory services.
Why Does SNEX Give Us Pause?
- Incremental sales over the last five years were less profitable as its 1.7% annual earnings per share growth lagged its revenue gains
- Sizable asset base leads to capital growth challenges as its 6.5% annual tangible book value per share increases over the last two years fell short of other financials companies
- Elevated debt-to-equity ratio of 7.5× suggests the firm is overleveraged and may struggle to secure additional financing
StoneX is trading at $97.59 per share, or 1.7x forward P/E. Read our free research report to see why you should think twice about including SNEX in your portfolio.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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