10 Best Stocks In Each Sector In 2024

6. S&P Global Inc. (NYSE:SPGI)

Number of Hedge Fund Holders in Q2 2024: 90

S&P Global Inc. (NYSE:SPGI) is one of the biggest financial services providers in the world. It has a diverse set of products which range from credit ratings to third party research, supply chain solutions, and stock index management. However, despite the diversity, $4.5 billion of S&P Global Inc. (NYSE:SPGI)’s $7 billion in revenue during H1 2024, or 64% came from its markets intelligence and credit rating businesses. The picture is further complicated by the fact that market intelligence is a margin light business, as 48% of the firm’s $2.9 billion of H1 operating income was through ratings. What these metrics imply is that S&P Global Inc. (NYSE:SPGI) is heavily dependent on the bond market for its performance. Consequently, as credit markets recover from the shock of 24 year high interest rates, S&P Global Inc. (NYSE:SPGI)’s shares are up by just 9.30% since 2022 start. However, provided that capital markets activity grows, then the stock could provide gains, particularly as the ratings division’s H1 2024 revenue of $2.2 billion marked a 29% annual growth.

S&P Global Inc. (NYSE:SPGI)’s management commented on the rating business during its Q2 2024 earnings call:

“Now turning to Ratings where we saw exceptional revenue growth of 33% which exceeded our internal expectations. Transaction revenue grew by 63% in the second quarter, fueled by increased bank loan and bond issuance. Non-transaction revenue increased 9%, primarily due to an increase in annual fee revenue and an increase in new mandates, particularly from the return of high-yield issuers. Adjusted expenses increased 8%, driven by higher compensation, including incentives, as well as investments in strategic initiatives.

This resulted in a 52% increase in operating profit and an 810 basis point increase in operating margin to 65.8%. For the trailing 12 months, Ratings margin expanded 570 basis points to 60.9%.”