The Best Financial-Services Stocks to Buy

Financial-services companies provide a wide range of vital services to millions of people—including credit cards, wealth and asset management, and products and research to make investing easier.

In the year to date, the Morningstar US Financial-Services Index rose 8.80%, while the Morningstar US Total Market Index gained 13.37%.

The 12 Best Financial-Services Stocks to Buy Now

These were the most undervalued financial-services stocks that Morningstar’s analysts cover as of Nov. 4, 2026.

1. Klarna Group KLAR
2. LPL Financial Holdings LPLA
3. Nu Holdings NU
4. PayPal Holdings PYPL
5. Charles Schwab SCHW
6. Western Union WU
7. NatWest Group NWG
8. Carlyle Investment Management CG
9. Bank of America BAC
10. HSBC Holdings HSBC
11. Banco Bilbao Vizcaya Argentaria BBVA
12. Blackstone BX

To come up with our list of the best financial-services stocks to buy now, we screened for:

• Financial-services stocks that are undervalued, as measured by our price/fair value metric.
• Stocks that earn narrow or wide Morningstar Economic Moat Ratings. We think companies with narrow economic moat ratings can fight off competitors for at least 10 years; wide-moat companies should remain competitive for 20 years or more.
• Stocks that earn a Low, Medium, High, or Very High Morningstar Uncertainty Rating, which captures the range of potential outcomes for a company’s fair value.

Here’s a little more about each of the best financial-services stocks to buy, including commentary from the Morningstar analysts who cover each company. All data is as of Nov. 4, 2026.

Klarna Group

• Morningstar Price/Fair Value: 0.36
• Morningstar Uncertainty Rating: Very High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 0.00%
• Industry: Credit Services

Credit services firm Klarna Group is the most affordable stock on our list of the best financial-services stocks to buy. Klarna is the largest pure-play in the buy now, pay later space. The stock is trading 64% below our fair value estimate of $38.30 per share.

Klarna has recently signed multiple agreements with payment-services providers, which will significantly broaden its reach as a payment method this year and in the years to come. Growth is what it is all about for Klarna. Its platform is just breaking even, starting to eke out a marginal operating profit, but as its platform ramps up further and its underwriting models are fed more data on shopper behaviors, we think Klarna will turn itself into a profitable staple among fintechs globally.

The PSP agreements will drive a step-up in volume growth and allow Klarna to upsell merchants to its customer conversion tools over time. We are positive on this strategy, as it brings growth at a low margin, but rapid and massive scale, with the upside of growth on the merchant and customer side.

Its growth ambitions focus primarily on the US, a large, homogeneous market that is receptive to credit products. That said, Klarna is facing tougher competition in this market already, primarily from card-issuing banks that retain customers through lucrative reward programs. However, Klarna’s BNPL solutions are not a one-to-one equivalent to credit cards. We expect more affluent shoppers to start using Klarna as it grows its visibility on merchants’ checkout pages. More shoppers will start using Klarna as a payment method, feeding Klarna’s network effect.

Klarna is growing its subscription revenue, which will decouple its revenue performance from transaction volumes and improve profitability. Monetizing its network is a natural evolution from its growth trajectory. Albeit still small, growth rates over the last year and new benefits for subscribers should turn this recurring revenue stream into a material contributor to Klarna’s equity story.

Its funding profile, using retail deposits to fund its European balance sheet, is a unique feature of Klarna. We think it improves Klarna’s stability. Outside of Europe, we think obtaining local banking licenses is a desirable outcome, but it’s not an easy ask. Convincing regulators of Klarna’s stability and ability to protect depositors will be a long endeavor.

Read more about Klarna Group here.

LPL Financial Holdings

• Morningstar Price/Fair Value: 0.62
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 0.39%
• Industry: Capital Markets

LPL Financial is the largest US independent broker/dealer, with more than 32,000 financial advisors, roughly 11 million customer accounts, and roughly $2.4 trillion in client assets under management or advisory affiliated with its platform at the end of 2025. Trading 38% below our fair value estimate, LPL Financial Holdings has an economic moat rating of wide. We think shares of this stock are worth $500 per share.

In recent years, LPL Financial has prioritized growth in advisory headcount by expanding its affiliation models, broadening its array of higher-touch services and its product shelf, allowing it to better serve advisors with higher-net-worth clientele, and engaging in strategic mergers and acquisitions. This, in turn, has allowed the company to generate scale over relatively fixed trading and back-office costs, strengthening its cost advantage relative to smaller independent broker/dealer competitors. Simultaneously, LPL has invested in a liquidity and succession program to help retiring advisors sell their practices while retaining assets in the firm’s ecosystem. Attributable primarily to these strategies, LPL has seen its advisor headcount grow to north of 32,000 in 2025, an 8.7% annual growth rate during a decade in which overall advisor headcount grew just 0.3% (McKinsey), while maintaining an asset retention rate north of 97% during the period. Overall, we take a positive view of the firm’s strategy and expect its advantages to become even more entrenched moving forward as the industry continues to consolidate.

Looking ahead, we view the firm’s expansion of affiliation options and services as a nice option for investors, enabling LPL to compete for a larger chunk of the roughly $36 trillion in US-advised assets (Cerulli) at year-end 2024. Still, we expect the firm’s stronghold to remain the long tail of less productive financial advisors, who are generally attracted to LPL’s high payout rates (nearly 90%), competitive technology platform and product shelf, and solid service levels. The firm also outperforms its IBD peers in the institutional channel (insurance companies and banks), with those players generally viewing the broker/dealer as a partner rather than a competitor, given its decision to eschew first-party asset management and insurance products.

We’re generally constructive regarding LPL Financial’s M&A strategy, but expect few prospective options—given the dearth of remaining midsize firms—for the company to engage in sizable deals like Atria (2024) or Commonwealth Financial Network (2025) in future years.

Read more about LPL Financial Holdings here.

Nu Holdings

• Morningstar Price/Fair Value: 0.72
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 0.00%
• Industry: Banks—Regional

Next on our list of the best financial-services stocks to buy is Nu Holdings. Nubank is a Brazilian financial technology firm that offers digital banking services in Brazil, Mexico, and Colombia. The stock is trading at a 28% discount to our fair value estimate of $16.60 per share.

In 2026, we expect Nubank to continue to focus on international growth, making major inroads into the Mexican and Colombian banking industries. This approach seems prudent to us; the firm has already been a major disruptive force in the Brazilian banking system thanks to the strong cost advantages of its fully digital banking platform, and those newer markets offer access to a largely untapped and reasonably affluent clientele. Exporting its competitively advantaged operating model to new markets, particularly ones with large unbanked or underbanked populations like Mexico and Colombia, seems like the logical choice, and we see significant long-term growth potential for Nubank from international expansion. Given its already expansive presence in Brazil, with over 60% of adults having an account with the firm, new customers will likely be increasingly difficult to find in its home market.

As a fully digital bank, Nubank operates without the heavy costs associated with operating expansive branch networks, like those of its traditional bank rivals. With more than twice the revenue per employee of its closest Brazilian competitors, Nubank can offer more-attractive terms and fees while still enjoying industry-leading profitability. It uses its superior value proposition to drive dramatic share gains in countries that have typically had heavily concentrated banking sectors with high fees.

Nubank offers a narrower line of lending products than the traditional banks it competes with, avoiding auto loans and mortgages. We like this approach, as it allows the company to focus on gaining competitive scale in its chosen markets and avoid lending categories where its cost of funds disadvantage would be more meaningful (consumer credit cards are more sensitive to underwriting than cost of funds). We think Nubank has built a competitively advantaged operating model that shows strong signs of portability between Latin American markets. We see significant room for secular growth as it pulls underbanked consumers into the financial system across multiple nations.

Read more about Nu Holdings here.

PayPal Holdings

• Morningstar Price/Fair Value: 0.75
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 0.93%
• Industry: Credit Services

PayPal was spun off from eBay in 2015 and provides electronic payment solutions to merchants and consumers, with a focus on online transactions. Trading 25% below our fair value estimate, PayPal Holdings has an economic moat rating of narrow. We think shares of this stock are worth $80 per share.

PayPal’s early development of a network of merchants and consumers enabled the company to build and maintain a strong competitive position in the online payments channel. Historically, PayPal’s growth had been driven by the ongoing shift toward electronic payments and the rise of e-commerce, which the coronavirus pandemic temporarily accelerated. However, the company has faced headwinds as the pandemic-related positives reversed and new competition emerged. Management has sought to counter pressure on top-line growth by increasing focus on cost control and product innovation, with the goal of shifting to more profitable growth.

We see this evolution as the right move, but it will likely take some time to fully execute. Recently, the company announced a new CEO, as the board felt that progress had been too slow. As a result, 2026 will be a transition year for PayPal.

In the long term, we see a mix of competitive opportunities and threats that could lead to a wide range of outcomes. PayPal remains a somewhat unique player within the payments space. We think this remains its key strength, but its position on both the merchant and consumer side could be increasingly challenged over the long run. On the merchant side, new online-focused acquirers have emerged, and financial technology innovation also appears to be concentrated in the e-commerce space. On the consumer side, services such as Apple Pay represent competition for PayPal. Competition on both sides could chip away at PayPal’s position. On the other hand, PayPal remains a preferred partner in the online space, its Braintree business is becoming more profitable and we think Venmo creates option value. In balance, we think the company can hold its own, but we recognize the potential to veer in either direction.

PayPal’s online focus leaves it relatively exposed to an economic downturn, as online purchases tend to be discretionary. If the macroeconomic picture worsens, it could potentially put more pressure on the company and obscure any underlying improvements.

Read more about PayPal Holdings here.

Charles Schwab

• Morningstar Price/Fair Value: 0.76
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 1.37%
• Industry: Capital Markets

Charles Schwab is one of the largest retail-oriented financial-services companies in the US, with $11.9 trillion in client assets across its brokerage, banking, asset management, custody, financial advisory, and wealth management businesses at the end of 2025. Charles Schwab is an affordable financial-services stock, trading at a 24% discount to our fair value estimate of $123 per share. The capital markets company earns a wide economic moat rating.

Charles Schwab’s strategy rests on three pillars: deepening client relationships, leveraging scale to drive efficiency, and delivering on what the company calls the brilliant basics. We view this as an appropriate approach.

Schwab has done an excellent job over the years in deepening its customer relationships by building a robust, intuitive trading and advisory platform with an ever-expanding menu of services. From its roots as a retail brokerage, Schwab has expanded into mutual fund distribution, proprietary and low-cost asset management products, lending, retirement accounts, and most recently, wealth management. As a result, it has emerged as a premier asset gatherer in the industry, with 5%-6% annual organic net asset growth over the past decade (adjusted for TD Ameritrade), driving its total client assets to $11.9 trillion at the end of 2025.

With Schwab servicing just 40%-45% of customer assets, by our estimates, we see plenty of runway for future growth as it adds in-demand products such as alternative-investment products, cryptocurrency trading, and continues to expand its still-small loan book, encouraging clients to consolidate their financial lives with Schwab. Its attention to the “brilliant basics” affords Schwab the ability to credibly introduce new products and organically increase its scale.

As we see it, increasing scale and reducing cost to serve is critical in a financial-services industry that continues to see fee compression as transparency and the availability of low-cost alternatives increase. Schwab drove its expense/client assets ratio down to just 0.12% during the most recent fiscal year, head and shoulders above the 0.47% and 0.37% average among its online brokerage and wirehouse competitors, respectively (by our calculations). Maintaining its position as a low-cost operator will be essential. The addition of new products allows Schwab to spread investments across a broader base of assets in a way that higher-cost peers simply cannot, entrenching its competitive edge.

Overall, Schwab’s best-in-class efficiency and attractive product suite position the firm well to continue to gain market share in a competitive financial-services industry.

Read more about Charles Schwab here.

Western Union

• Morningstar Price/Fair Value: 0.78
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 14.26%
• Industry: Credit Services

Western Union provides domestic and international money transfers through its global network of over 500,000 outside agents. Trading 22% below our fair value estimate, Western Union has an economic moat rating of narrow. We think shares of this stock are worth $8.50 per share.

Western Union’s performance in recent years has been weak, which we think has played into the idea that the company is being disrupted by newer players. But we continue to believe Western Union has a narrow moat based on its sizable scale advantage, but the amount of value the moat will create could be questioned. Additionally, in the near term, political headwinds in the US will likely offset any underlying improvements the company is making. The current administration’s aggressive efforts to reduce immigration are having a material impact on money transfers.

While we think that digital-only players may become less of an issue over time, as their ability to run ongoing losses is diminished going forward, we also think Western Union’s recent lack of traction in digital channels suggests it might not adapt to this industry shift as well as we previously anticipated. Additionally, the pressure on this front appears to have accelerated recently, with management noting that a faster shift toward purely digital transfer is negatively impacting both the top and bottom lines.

The company has been trying to actively building out its presence in electronic channels in recent years to adapt to the change in the industry. Western Union saw a sharp spike in digital transfers at the beginning of the pandemic. Western Union achieved a 32% year-over-year increase in transaction growth in 2021 as this area of the company’s business jumped to about a fourth of revenue. More recently, results took a sharp negative turn, and management is attempting to get this side of the business back on track with investments in its platform and pricing actions. We’re dissapointed with the relative lack of progress.

In our view, scale and market share across all channels will be the dominant factor in long-term competitive position. However, the growth that the company is seeing in digital transfers has not led to strong overall growth historically, and we don’t expect this situation to change. In fact, we think the company may have difficulties in just maintaining its top line.

Read more about Western Union here.

NatWest Group

• Morningstar Price/Fair Value: 0.82
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 5.70%
• Industry: Banks—Regional

NatWest Group derives around 90% of its total income from the United Kingdom. The firm earns a narrow economic moat rating, and the shares of its stock look 18% undervalued relative to our $20.30 fair value estimate.

NatWest operates a strong retail and commercial banking franchise in the UK. Despite a competitive UK market, we think that NatWest’s large deposit share and access to low- or non-interest-bearing funding sources will allow the bank to derive healthy returns.

NatWest follows a prudent, low-risk growth strategy, aiming to retain front-book mortgage market shares similar to its back book while pursuing a greater share of noninterest income streams.

In mortgages, NatWest has a high market share in low-loan-to-value mortgages, which is profitable for the bank despite margin pressure, as it can deploy its low-cost funding in this segment. With partnerships, the bank also takes smaller exposure in more specialist mortgage lending, such as buy-to-let.

NatWest has benefited from the higher interest rate environment. While mortgage margins remain under pressure due to the competitive nature of the UK mortgage market, higher deposit spreads have been a boon for NatWest. Inflation and base rates remain higher than in continental Europe, and current swap rates still result in structural hedge tailwinds. With many of these hedges written for 2027 and partially for 2028, the support for net interest margins from the structural hedge is set to persist, albeit fading.

NatWest has significantly improved its capital base over the last decade, shedding or closing underperforming businesses and narrowing its focus on the UK market with small ancillary capital market operations. Excess capital, as a result of the previous government ownership and better capital efficiency, has been distributed to shareholders or has been deployed in small bolt-on acquisitions in the retail segment.

Read more about NatWest Group here.

Carlyle Investment Management

• Morningstar Price/Fair Value: 0.82
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.27%
• Industry: Asset Management

Carlyle Group is one of the world’s largest alternative-asset managers, with $485.5 billion in total AUM, including $334.4 billion in fee-earning AUM, at the end of June 2026. The firm earns a narrow economic moat rating and the shares of its stock look 18% undervalued relative to our $52 fair value estimate.

The Carlyle Group has built a solid position in the alternative-asset management industry. It relies on its reputation, broad product portfolio, investment performance history, and cadre of dedicated professionals to not only raise capital but maintain its standing as a go-to firm for institutional and high-net-worth investors looking for exposure to alternative assets. With $485.5 billion in total assets under management, or AUM, including $334.4 billion in fee-earning AUM, at the end of June 2026, Carlyle is one of the world’s largest alternative-asset managers.

The company’s portfolio is diversified across business segments and primarily serves clients in the institutional channel: global private equity, which includes private equity, real estate, infrastructure, and natural resources funds, is expected to account for 29% of fee-earning AUM and 51% of base management fees during 2026, while global credit (49% and 26%) and other alternatives (22% and 23%) make up the remainder.

With customer demand for alternatives expected to stay elevated and investors in alternative assets looking to limit the number of providers they use, larger-scale players like Carlyle Group are advantaged, not only when it comes to fundraising but during deployments and realizations.

That said, we believe the negative perceptions currently attached to the private credit market—brought on by peer Blue Owl’s handling of some of its private credit funds, which have raised concerns about liquidity for these types of funds especially given the riskiness of their direct lending portfolios—are likely to be a drag on results in the near to medium term.

Read more about Carlyle Investment Management here.

Bank of America

• Morningstar Price/Fair Value: 0.83
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 2.48%
• Industry: Banks—Diversified

Bank of America is a formidable financial titan with a $3.43 trillion balance sheet and a cornerstone of the American economy, holding the second-largest deposit market share in the United States. The firm earns a wide economic moat rating and the shares of its stock look 17% undervalued relative to our $62 fair value estimate.

We view Bank of America’s strategy as a testament to the efficacy of a scaled, integrated model. Pursuing a core strategy of responsible growth, the company aims to grow in a way that looks good, leveraging its size and international presence to build a system that helps almost every customer, everywhere. While peers, particularly in Europe, have narrowed their service scope, Bank of America maintains formidable scale, allowing it to demonstrate a commitment to digital leadership and to reap the economic benefits of fractionalizing this expenditure across its retail, wealth, and institutional footprints. A prime example is Erica, its AI virtual assistant, which spans business lines and facilitated 191 million interactions in the third quarter of 2026, deeply embedding the bank into the operations of its 50 million active digital users.

Flexing this scale to offer a deep product shelf at competitive costs has allowed the firm to capture top-tier market share across various lines of business. Its retail operations hold the largest market share of US consumer deposits, serving over 70 million clients through 3,531 financial centers. The wealth management franchise provides sticky, fee-based revenue with approximately $5.0 trillion in client balances. Meanwhile, the firm’s trading operations and investment banking division consistently rank among the top four globally by revenue.

The “responsible” pillar of the firm’s growth framework is underpinned by an unwavering commitment to a disciplined risk framework. Bank of America intentionally skews its loan portfolio toward higher-quality borrowers, operating with strict underwriting standards that have yielded the lowest total loss rate among peers in 13 of the past 14 Federal Reserve stress tests. Though the banking industry is inherently cyclical, the firm maintains a highly capitalized, liquid foundation, anchored by an 10.9% common equity Tier 1 capital ratio and $914 billion in average global liquidity. This disciplined posture ensures through-the-cycle resilience and provides ample flexibility to continually fund organic growth and deliver robust shareholder returns.

Read more about Bank of America here.

HSBC Holdings

• Morningstar Price/Fair Value: 0.84
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 2.24%
• Industry: Banks—Diversified

Established in 1865 in Hong Kong, London-based HSBC is one of the largest banks in the world, with assets of $3 trillion and over 40 million customers worldwide. HSBC Holdings is an affordable financial-services stock, trading at a 16% discount to our fair value estimate of $107 per share. The diversified bank earns a narrow economic moat rating.

HSBC is nearing the end of a multiyear restructuring aimed at simplifying its footprint, reducing costs, and exiting underperforming businesses. The group has substantially unwound acquisitions made in the early 2000s that diluted returns, particularly in markets such as the US where it lacked scale and faced higher regulatory costs. More recently, HSBC has sharpened its geographic focus toward Hong Kong and the UK—its two core markets where it benefits from leading deposit franchises and strong brand recognition. We view this pivot as strategically sound, as scale in these markets underpins a structurally low-cost funding base and supports more resilient profitability. The acquisition of the remaining shares in Hang Seng Bank is expected to further enhance capital flexibility and strengthen HSBC’s position in Hong Kong.

Looking ahead, HSBC’s growth strategy is increasingly centered on higher-return, capital-light businesses, particularly wealth management. Management is focused on scaling its affluent client base and increasing product penetration to drive fee income. We believe HSBC is well-positioned to capture wealth growth in Asia, supported by its status as the leading wealth manager in Asia. Its global network across key wealth hubs also enables it to capture cross-border wealth opportunities.

In wholesale banking, HSBC continues to leverage its global network to deepen relationships with multinational corporates. By embedding transaction banking, payments, and markets capabilities into client relationships, the group aims to increase wallet share and reinforce its role as a core cross-border banking partner.

Read more about HSBC Holdings here.

Banco Bilbao Vizcaya Argentaria

• Morningstar Price/Fair Value: 0.85
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 4.42%
• Industry: Banks—Diversified

Despite its Spanish origins, Banco Bilbao Vizcaya Argentaria generates only around one-fourth of its profits in Spain. Banco Bilbao Vizcaya Argentaria is an affordable financial-services stock, trading at a 15% discount to our fair value estimate of $30 per share. The diversified bank earns a narrow economic moat rating.

We believe that Banco Bilbao Vizcaya Argentaria will generate higher midcycle profitability than its peers, supported by its market-leading positions in attractive banking jurisdictions, notably Mexico. Due to its significant emerging market presence, investors often perceive BBVA as riskier than other European banks. There are, however, several mitigating factors for any higher country risk. First, BBVA tends to hold a dominant position in the countries it operates in, with significant market shares in low-cost demand deposits, supporting profitability. Second, BBVA is a retail and commercial bank with limited exposure to volatile investment banking activities. Third, diversification across different geographies reduces earnings volatility, and BBVA’s earnings have historically been more stable than those of most other European banks we cover. We also highlight that BBVA’s decentralized funding model limits its exposure to the equity investment in each subsidiary.

The crown jewel in BBVA’s portfolio is its highly profitable Mexican operation. BBVA is the clear market leader in the oligopolistic Mexican banking sector, with 40% of Mexicans receiving their salary in a BBVA current account. This enviable position has supported BBVA’s ability to generate returns on equity north of 20% in Mexico consistently. Geopolitical tension is leading to a reorganization of global supply chains, with US firms looking to bring some outsourced activities closer to home. This trend could become a long-term secular growth theme for the Mexican economy, supporting BBVA’s revenue.

The profitability of BBVA’s Spanish business has benefited greatly from higher interest rates. Ultralow European interest rates over the past decade have obscured the underlying profitability of many European banks. Consequently, we believe there is a structural element to BBVA’s higher Spanish profitability. Increased consolidation of the Spanish banking market is also supporting higher profitability.

Read more about Banco Bilbao Vizcaya Argentaria here.

Blackstone

• Morningstar Price/Fair Value: 0.85
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 4.03%
• Industry: Asset Management

Asset management firm Blackstone rounds out our list of best financial-services stocks to buy. Blackstone is the world’s largest alternative-asset manager with $1.346 trillion in total assets under management, including $961.6 billion in fee-earning assets under management, at the end of June 2026. The stock is 15% undervalued relative to our fair value estimate of $147 per share.

We consider Blackstone to be the preeminent alternative-asset manager, with $1.346 trillion in total assets under management, including $961.6 billion in fee-earning assets under management, at the end of June 2026. The company operates with scale in each of its major product lines: private equity (28% of fee-earning AUM and 35% of base management fees), real estate/real assets (29% and 32%), credit and insurance (33% and 25%), and other alternatives (10% and 8%). Blackstone has also built a large base of in-house executives, consultants, and advisors who have decades of industry experience and can revitalize a company or property through cost-cutting, acquisitions, or other strategic maneuvers.

With the alternatives industry so heavily weighted toward private equity (55% of industry fee-earning AUM), and a lot of firms being US-centric, we’ve generally held Blackstone up as the prime example of what we’d like to see from a product diversification perspective, even if it could do a bit more, in our view, to expand its non-US operations. More importantly, Blackstone’s diversified revenue streams (based on its fee-earning AUM and geographic reach) have kept its base management fee revenue and fee-related earnings fairly stable as they have expanded over the years. On top of that, the company is currently earning 50%-100% more in fee-related revenue and earnings than each of its three largest peers: Brookfield Asset Management, Apollo Global Management, and KKR.

With customer demand for alternatives expected to stay elevated and investors in alternative assets looking to limit the number of providers they use, large-scale players like Blackstone are advantaged in fundraising as well as deployments and realizations. However, we believe the negative perception currently attached to the private credit market, brought on by peer Blue Owl’s handling of some of its private credit funds, has raised concerns about liquidity for these types of funds, especially given the riskiness of their direct lending portfolios. This is likely to drag on results in the near to medium term.

Read more about Blackstone here.

How to Find More of the Best Financial-Services Stocks to Buy

Investors who’d like to extend their search for top financial-services stocks can do the following:

• Review Morningstar’s comprehensive list of financial-services stocks to investigate further.
• Stay up to date on the financial-services sector’s performance, key earnings reports, and more with Morningstar’s financial-services sector page.
• Read Morningstar’s Guide to Stock Investing to learn how our approach to investing can inform your stock-picking process.
• Use the Morningstar Investor screener to build a shortlist of financial-services stocks to research and watch.