Financial institutions play a critical role, offering everything from consumer banking to wealth management and specialized financial solutions. But uncertainty about fiscal and monetary policy has tempered enthusiasm, and over the past six months, the industry has pulled back by 6%. This drawdown is a noticeable divergence from the S&P 500’s 6.5% return.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here is one financials stock boasting a durable advantage and two we’re swiping left on.

Market Cap: $4.43 billion

With a proprietary "CarbonCount" metric that quantifies the environmental impact of each dollar invested, HA Sustainable Infrastructure Capital (NYSE:HASI) is an investment firm that finances and develops climate-positive infrastructure projects across renewable energy, energy efficiency, and ecological restoration.

Why Does HASI Fall Short?

Underwhelming 7.2% return on equity reflects management’s difficulties in finding profitable growth opportunities

High net-debt-to-EBITDA ratio of 27× could force the company to raise capital at unfavorable terms if market conditions deteriorate

HA Sustainable Infrastructure Capital is trading at $37.28 per share, or 12.7x forward P/E. If you’re considering HASI for your portfolio, see our FREE research report to learn more.

Market Cap: $6.75 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 Worry Us?

Performance over the past five years shows its incremental sales were less profitable, as its 1.7% annual earnings per share growth trailed its revenue gains

Sizable asset base leads to capital growth challenges as its 6.6% annual tangible book value per share increases over the last two years fell short of other financials companies

High debt-to-equity ratio of 7.8× shows the firm carries too much debt relative to shareholder equity, increasing bankruptcy risk

StoneX’s stock price of $128.57 implies a valuation ratio of 2.2x forward P/E. Read our free research report to see why you should think twice about including SNEX in your portfolio, it’s free.

Market Cap: $4.13 billion

With roots dating back to 1955 and a pioneering role in money market funds, Federated Hermes (NYSE:FHI) is an investment management firm that offers a wide range of funds and strategies for institutional and individual investors.

Why Are We Positive On FHI?

Performance over the past two years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue

Market-beating return on equity illustrates that management has a knack for investing in profitable ventures

At $55.58 per share, Federated Hermes trades at 10.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

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