Financial providers use their expertise in capital allocation and risk assessment to help facilitate economic growth while offering consumers and businesses essential financial services. But uncertainty about fiscal and monetary policy has tempered enthusiasm, limiting the industry's gains to 5.6% over the past six months. This return lagged the S&P 500's 11.3% climb.
A cautious approach is imperative when dabbling in financials as many are sensitive to economic cycles and regulatory changes. Taking that into account, here are three financials stocks best left ignored.
Franklin Resources (BEN)
Market Cap: $12.44 billion
Operating under the widely recognized Franklin Templeton brand since 1947, Franklin Resources (NYSE:BEN) is a global investment management organization that offers financial services and solutions to individuals, institutions, and wealth advisors worldwide.
Why Do We Pass on BEN?
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 3.3% annually
- Low return on equity reflects management’s struggle to allocate funds effectively
At $23.91 per share, Franklin Resources trades at 9.7x forward P/E. To fully understand why you should be careful with BEN, check out our full research report (it’s free for active Edge members).
Bread Financial (BFH)
Market Cap: $3.41 billion
Formerly known as Alliance Data Systems until its 2022 rebranding, Bread Financial (NYSE:BFH) provides credit cards, installment loans, and savings products to consumers while powering branded payment solutions for retailers and merchants.
Why Do We Think BFH Will Underperform?
- Sales tumbled by 6.1% annually over the last two years, showing market trends are working against its favor during this cycle
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
Bread Financial’s stock price of $74.61 implies a valuation ratio of 8.6x forward P/E. Read our free research report to see why you should think twice about including BFH in your portfolio.
Oaktree Specialty Lending (OCSL)
Market Cap: $1.13 billion
Managed by Oaktree Capital Management, one of the world's premier alternative investment firms, Oaktree Specialty Lending (NASDAQ:OCSL) is a business development company that provides customized financing solutions to mid-market companies across various industries.
Why Do We Steer Clear of OCSL?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 8.6% annually over the last two years
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 14.5% annually while its revenue grew
- Annual tangible book value per share declines of 3.1% for the past five years show its capital management struggled during this cycle
Oaktree Specialty Lending is trading at $12.84 per share, or 3.7x forward price-to-sales. Check out our free in-depth research report to learn more about why OCSL doesn’t pass our bar.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.