Are you wondering what are the top financial stocks 2020? You might think of the big banks as the leading and most obvious picks to buy financial stocks now. However, banks like Goldman Sachs, JP Morgan, and Morgan Stanley all saw their revenues surge even during peak volatility. The reason for the surprisingly good performance was the trading units of these banks.
All of the big US banks have a consumer division and an investment banking division. The investment banking division has a trading unit that managed to take advantage of the heightened volatility in the stock markets. However, once the volatility subsides, the performance of these trading units might not sustain to the exceptionally high levels that they have during the past few months. Besides, lenders around the world are facing loan defaults and muted credit growth.
In such a scenario, an alternative segment to look at would be credit rating agencies. Two of the biggest names are S&P Global Inc. (NYSE: SPGI) and Moody’s Corporation (NYSE: MCO). These two are among the largest credit rating agencies in the world. S&P Global Inc and Moody’s beat analyst estimates when they reported their Q22020 earnings in July end. S&P Global Inc has returned 24.99% year-to-date while Moody’s has returned 13.98% year-to-date.
Subscription-based products mean that revenues for both of these firms were relatively uninterrupted during the worst of the pandemic outbreak. Additionally, there could be greater demand for the rating of debt securities with interest rates down at historic lows. With a vaccination not expected until the end of 2020 or the beginning of 2021, credit rating stocks might well turn out to be the best financial stocks for 2020.
The immense importance of credit rating agencies to companies and governments all around the world make either of these companies a candidate for the best financial stock to buy right now.