In this article, we discuss 5 finance stocks to buy according to Arrowstreet Capital as of the end of the third quarter of 2021 and assess their performance over the past 12 months. If you want our detailed analysis of these stocks, go directly to Was Arrowstreet Capital Right About These 10 Finance Stocks?
5. American Express Company (NYSE:AXP)
Arrowstreet Capital’s Stake Value: $425,132,000
Stock performance over the past 12 months through November 25: -1.70%
American Express Company (NYSE:AXP) is a multinational credit card service corporation that declared on December 8 a $0.43 per share quarterly dividend, in line with previous, offering a forward yield of 1.02%. The dividend will be paid on February 10 to shareholders of record on January 7.
Barclays analyst Mark DeVries raised the price target on American Express Company (NYSE:AXP) to $182 from $171 and kept an Equal Weight rating on the shares on January 10.
Here is what ClearBridge Investments has to say about American Express Company (NYSE:AXP) in its Q2 2021 investor letter:
“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
4. Ally Financial Inc. (NYSE:ALLY)
Arrowstreet Capital’s Stake Value: $442,258,000
Stock performance over the past 12 months through November 25: -44%
Another finance stock pick from Arrowstreet Capital’s Q3 portfolio is Ally Financial Inc. (NYSE:ALLY), which is a Michigan-based bank holding company specializing in car finance, online banking, mortgage loans, and stock brokerage.
Piper Sandler analyst Kevin Barker lowered the price target on Ally Financial Inc. (NYSE:ALLY) to $53 from $59 and kept a Neutral rating on the shares on December 22.
3. Synchrony Financial (NYSE:SYF)
Arrowstreet Capital’s Stake Value: $583,906,000
Stock performance over the past 12 months through November 25: -22%
Synchrony Financial (NYSE:SYF) is a Connecticut-based company offering consumer financing products including credit cards, loyalty programs, and saving instruments. Arrowstreet Capital owns a $583.9 million stake in Synchrony Financial (NYSE:SYF) as of September 2021, which accounts for 0.73% of the fund’s total 13F securities.
Barclays analyst Mark DeVries on January 10 raised the price target on Synchrony Financial (NYSE:SYF) to $64 from $63 and kept an Overweight rating on the shares.
2. Capital One Financial Corporation (NYSE:COF)
Arrowstreet Capital’s Stake Value: $879,151,000
Stock performance over the past 12 months through November 25: -31%
Capital One Financial Corporation (NYSE:COF), an American bank holding company headquartered in Virginia, is one of the top finance stocks to buy according to Arrowstreet Capital.
Goldman Sachs analyst Ryan Nash removed Capital One Financial Corporation (NYSE:COF) from the firm’s Americas Conviction List but kept a Buy rating on the shares with a price target of $174, down from $185 on January 6. The analyst sees a “less compelling story”, saying Capital One Financial Corporation (NYSE:COF)’s increased technology investment and higher marketing will likely put a pause on progress towards its operating efficiency targets.
Here is what ClearBridge Investments has to say about Capital One Financial Corporation (NYSE:COF) in its Q2 2021 investor letter:
“Portfolio holdings in the communication services and financial sectors also made strong contributions… In financials, Capital One has also benefited, at least indirectly, from government stimulus that has strengthened customer balance sheets and driven credit losses to record lows. Capital One should also benefit from a reopening of the economy and increased discretionary spending.”
1. PayPal Holdings, Inc. (NASDAQ:PYPL)
Arrowstreet Capital’s Stake Value: $897,536,000
Stock performance over the past 12 months through November 25: -57%
PayPal Holdings, Inc. (NASDAQ:PYPL) is one of the top finance picks of Arrowstreet Capital from the third quarter of 2021, with the hedge fund holding 3.4 million shares of the company, worth $897.5 million, representing 1.12% of the total 13F securities.
Raymond James analyst John Davis lowered the price target on PayPal Holdings, Inc. (NASDAQ:PYPL) to $229 from $264 and kept an Outperform rating on the shares on January 11.
Here is what Baron Opportunity Fund has to say about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q3 2021 investor letter:
“PayPal Holdings, Inc. – PayPal first caught consumers’ attention as a peer-to-peer digital payment application, particularly as a convenient and trustworthy way for eBay buyers to pay eBay sellers in the early days of online shopping. Over the years it expanded to become a near ubiquitous online retail payments platform, while also offering other shopping tools and digital services, such as digital wallet, bill pay, Buy Now-Pay Later, crypto-currency, in-store retail, and more. According to PayPal’s CEO, these new acts enabled the company to increase the TAM it “play[s] in” by “over six times in the last three years.” PayPal has 403 million active accounts today and is on its way towards its 750 million target by 2025 and 1 billion longer term, for a total TAM sized at over $1 trillion.”
You can also take a look at Top 11 Stocks With Growth Potential According to Juniper Investment Company and 10 Stocks Hedge Fund Legend Donald Sussman is Buying.
