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 2025 through Aug. 27, the Morningstar US Financial Services Index rose 13.34%, while the Morningstar US Market Index gained 11.01%. The financial-services stocks that Morningstar covers look 10.4% overvalued on average.

The 6 Best Financial-Services Stocks to Buy Now

These were the most undervalued financial-services stocks that Morningstar’s analysts cover as of Aug. 27.

1. Western Union WU
2. MarketAxess MKTX
3. PayPal Holdings PYPL
4. TransUnion TRU
5. Prudential PUK
6. U.S. Bancorp USB

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, as well as companies that do not have a moat. 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 Aug. 27.

Western Union

• Morningstar Price/Fair Value: 0.50
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 10.99%
• Industry: Credit Services

Credit services firm Western Union is the cheapest stock on our list of the best financial-services stocks to buy. Western Union provides domestic and international money transfers through its global network of over 500,000 outside agents. The stock is trading 50% below our fair value estimate of $17 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 think the pressures the company has faced historically will ease a bit going forward. We continue to believe Western Union has a narrow moat based on its sizable scale advantage, but with limited long-term growth prospects, the amount of value the moat will create could be questioned. Additionally, the company faces some political headwinds as well.

We think the current management team has a better approach and has instituted pricing reductions to stabilize volumes and allow the company to start to grow modestly off a better base. We also think that digital-only players will become less of an issue over time, as the ability to run ongoing losses is diminished going forward.

The company has been 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 believe an aggressive approach is the best strategy, as Western Union positions itself to maintain its scale advantage despite the shift. In our view, scale and market share across all channels will be the dominant factor in long-term competitive position, and Western Union appears to be recovering its overall 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 the near term, however, 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.

Read more about Western Union here.

MarketAxess

• Morningstar Price/Fair Value: 0.72
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 1.62%
• Industry: Capital Markets

Founded in 2000, MarketAxess is a leading electronic fixed-income trading platform that connects broker/dealers and institutional investors. MarketAxess is an affordable financial-services stock, trading at a 28% discount to our fair value estimate of $260 per share. The capital markets company earns a wide economic moat rating.

MarketAxess operates the leading platform for the electronic trading of corporate bonds. While the company is primarily focused on US securities, 35% to 45% of its corporate bond trading volume comes from emerging-market debt and eurobonds, giving the company a strong international presence. MarketAxess also offers trading in US Treasuries and municipal bonds, bolstering its efforts in these sectors through the acquisitions of LiquidityEdge and MuniBrokers in 2019 and 2021, respectively. That said, corporate bonds are the core of MarketAxess’ business, which we expect to remain true, a consequence of being a relative newcomer to the Treasury trading market and the smaller size of the municipal debt market.

Fixed-income markets globally are increasingly moving away from voice-negotiated trading toward electronic trading platforms, as the liquidity and workflow enhancement of these electronic networks promise to lower implicit and explicit trading costs for increasingly expense-conscious firms. As MarketAxess rolls out new features such as automated trade execution and expands its Open Trading all-to-all network, the cost and liquidity advantages of electronic trading networks over traditional methods continues to increase.

So far 2025 has been a decent year for MarketAxess, as more corporate bond issuance and higher market activity have been driving trading volume up. However, the high volume industrywide has been partially offset by weaker average pricing and market share issues. MarketAxess continues to face significant competition in the electronically traded US corporate bond market from both Tradeweb and the smaller Trumid, which has led its investment-grade bond market share to be relatively stagnant and even deteriorate in recent months. To make matters worse, while MarketAxess retains a leading position in the US high-yield bond market, performance has been bad for over a year, with the firm seeing a material decline in market share. MarketAxess has responded by increasing its investment in its software and data tools, but 2025 will prove to be a crucial test to see if the firm can correct the negative trends in its US corporate bond business.

Read more about MarketAxess Holdings here.

PayPal

• Morningstar Price/Fair Value: 0.74
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: None
• Industry: Credit Services

Next on our list of the best financial-services stocks to buy is PayPal. The company was spun off from eBay in 2015 and provides electronic payment solutions to merchants and consumers, with a focus on online transactions. The stock is trading at a 26% discount to our fair value estimate of $94 per share.

PayPal’s development of a network of both merchants and consumers early in the evolution of e-commerce allowed the company to build and maintain an enviable competitive position. 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 ran into headwinds as the positives from the pandemic reversed and new competition arose. Management has attempted to combat the pressure on top-line growth with a greater focus on cost control and product innovation, with the ultimate goal of shifting toward more profitable growth. We see this evolution as the right move, but it will likely take some time to fully see the results. Additionally, PayPal’s online focus leaves it relatively exposed to a downturn in the economy, as online purchases tend to be discretionary. If the macro picture changes for the worse, this could swamp any underlying improvements in the near term.

Longer term, we see a mix of competitive opportunities and threats that create a fairly 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 challenged over the long run. On the merchant side, new online-focused acquirers have emerged and fintech 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 PayPal could build a growing presence in in-person transactions. In balance, we think the company can hold its own, but we recognize the potential to veer in either direction.

An additional attraction is Venmo. Efforts to monetize the platform are in still in the early stages and Venmo will likely not be a major driver anytime soon. But we believe it has the potential to create upside above our current fair value estimate.

Read more about PayPal Holdings here.

TransUnion

• Morningstar Price/Fair Value: 0.74
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 0.52%
• Industry: Financial Data and Stock Exchanges

TransUnion is one of the three leading credit bureaus in the United States, providing consumer information that is the basis for granting credit. TransUnion is an affordable financial-services stock, trading at a 26% discount to our fair value estimate of $120 per share. The financial data firm earns a wide economic moat rating.

TransUnion is one of the Big Three consumer credit bureaus, along with Equifax and Experian. Given the fixed costs inherent in a data-intensive business, TransUnion has been able to generate meaningful margin expansion over the past several years.

TransUnion’s core business is selling credit reports to US lenders, but as this business is the most mature, the company has sought other avenues of growth. One avenue has been expanding beyond financial institutions into verticals such as insurance, rental screening, collections, and other sectors. The emerging verticals business was 29% of the firm’s revenue in 2024, up from 21% in 2009. We believe this will help TransUnion weather a downturn as this revenue is diversified across industries and less macro-sensitive.

TransUnion has sought to replicate its US playbook internationally. The most intriguing opportunity is in India, which, given the country’s large population, could be an evergreen source of growth for the firm. TransUnion’s early entry has allowed it to build a commanding market share here. While it will probably take many years to fully realize this market’s potential, we think the company’s leading position provides meaningful long-term upside.

Since its public debut in 2015, TransUnion’s acquisition strategy has run the gamut from smaller bolt-on deals to larger acquisitions. Examples of bolt-on deals include Tru Optik and Signal Digital, which provide data and analytics for digital marketing. TransUnion’s larger deals include the $1.4 billion acquisition of UK credit bureau Callcredit in 2018, its $3.1 billion acquisition of Neustar in 2021, and its $638 million purchase of Sontiq in 2021. We believe TransUnion’s acquisitions have generally made strategic sense and have not weakened the firm’s moat, but the use of variable-rate debt to finance the 2021 deals proved to be untimely.

Read more about TransUnion here.

Prudential

• Morningstar Price/Fair Value: 0.78
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: None
• Forward Dividend Yield: 1.79%
• Industry: Insurance—Life

Originally established as Prudential Mutual Assurance, Investment, and Loan Association in 1848, Prudential has moved on a lot since then. The firm now focuses on life and health insurance in Asia and Africa. The stock is trading at a 22% discount to our fair value estimate of $33 per share.

With the divestment of its UK and European operations, followed by the sale of its Jackson business in North America, Prudential is now a life and health insurer that is fully focused on Asia and Africa, with one of the region’s largest asset management businesses.

Prudential is not the number-one operator. However, we do think the company is gaining traction and taking market share. Its roots stand in selling life insurance to the middle classes and branching out into the industrial and urbanizing working classes. While that happened almost two decades ago, we think that is still a relative narrative. The industrial division of Prudential led to the rise of door-to-door sales. The “man from the Pru” was born and for Prudential became synonymous. While that market may have matured and this practice has generally died, Prudential’s new geographical focus harkens back to these Industrial Revolution times, just in a different part of the world. Prudential’s more mature markets of Hong Kong and Singapore speak to the origination of the business to serve the middle class. Our sense is that in these markets, Prudential has been catering more to high net worth. Prudential’s establishment and focus on Southeast Asia is reminiscent of its sales and service to the rising industrial working class.

While Prudential may not be the biggest, and it may not be the first, we think the business has historically placed strong emphasis on pricing and underwriting discipline, and yet in this region it has been successful at combining that with growth. While margins on sales such as fees and loading costs have been pressured as competition has increased, Prudential has done a prodigious job of recouping this loss of profit from administration and acquisition costs. More telling is that on average Prudential improved the margin it makes from insurance by 5 basis points per year on average. The business hasn’t been operating for very long on a stand-alone basis. However, we think the markets and the company have some interesting features that could lead to economic profits—and, over time, a moat.

Read more about Prudential here.

U.S. Bancorp

• Morningstar Price/Fair Value: 0.90
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 4.10%
• Industry: Banks—Regional

Regional bank U.S. Bancorp rounds out our list of best financial-services stocks to buy. With assets of around $685 billion, it is one of the largest regional banks in the US, with its footprint in 26 states. The stock is 10% undervalued relative to our fair value estimate of $53.90 per share.

U.S. Bancorp is the largest non-global systemically important bank in the US and has been one of the most profitable regional banks we cover. Few domestic peers can match its operating efficiency and returns over the past 15 years. If we were to have a complaint, it would be that the bank has had a hard time maintaining the lead while some peers seem to be gradually catching up.

The bank has a unique mix of fee-generating businesses including payments, corporate trust, wealth management, and mortgage banking, which sets it apart from most regional peers, all while avoiding the volatile trading business. The payments business consists of merchant acquiring, corporate payments, and the more typical retail credit cards and debit cards. The trust business involves being an administrator and custodian for different investment vehicles. While these units have generated attractive returns, their heavy fixed-cost nature, scalability, and increased tech investment requirements have led to heavy consolidation in both industries and therefore intensified competition, with U.S. Bancorp now being a relatively small player compared with the largest in both spaces. However, having this more complete product portfolio does lead to economies of scope for the bank as a whole.

Its latest strategy has been to focus on its payment ecosystem, expand its branch footprint, and pursue new acquisitions and partnerships. The bank has expanded its footprint into several new population centers over the past several years and partnered with State Farm and Edward Jones. The 2022 acquisition of Union Bank greatly increased its presence in California. It is also investing in its payments ecosystem with tech spending and bolt-on deals to win more software-centric merchant acquiring business.

Gunjan Kedia became the bank’s new CEO in April 2025. We expect Kedia to continue to focus on improving the payment business, maintaining expense discipline, and working on the bank’s medium-term targets laid out in September 2024. We think its mid- to high-50s efficiency target is reasonable, and we expect the bank to improve its operating efficiency ratio in 2025 with revenue growth outpacing expense growth.

Read more about U.S. Bancorp 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.

Alexandra Santiago-Lindsay contributed to this article.