If you are looking to buy financial stocks, then banks and financial institutions come to mind. However, you may also want to consider other financial services firms like Morningstar. Morningstar is one of the leading firms that provide investment research, information, and investment management services. Morningstar has three main business divisions, namely Morningstar ratings, Morningstar mutual funds, and Morningstar investment management. Morningstar’s ratings business competes with the likes of Moody’s, S&P, and other large credit rating agencies.
ESG Is A Major Theme With Ratings Businesses
Ratings agencies are recently in focus because of a shift towards impact investing and sustainability. ESG metrics are sought after by investors and ratings agencies are now expected to provide ESG ratings for the companies that they cover. As a result, Morningstar and other companies in the industry are building their capabilities in ESG and are also acquiring other businesses. In Europe, the rules regarding the disclosure of ESG performance are becoming more clear and wide-ranging. There is almost an expectation that ratings companies will proactively play a role in furthering the shift towards ESG by providing data that is transparent and easily comparable. The ESG opportunity is clearly a longer-term growth opportunity for companies like Morningstar.
In order to pick the best financial stocks, you have to take a look at the stock performance in addition to analyzing the fundamentals. Morningstar’s stock closed at $222 on 28th December 2020. The stock has gained 11% during the preceding 30 days. Morningstar is up 47% in the year 2020 and up 187% since December of 2015. Moody’s Corporation stock closed at $277 on 28th December 2020, down 1.5% for the preceding 30 days. The stock is up 15% for the year 2020 and up 200% since December 2015. FactSet Research, meanwhile, closed at $330 on 28th December 2020. It is down 1% for the preceding month and up 22% for the year 2020. FactSet’s stock has doubled in the past 5 years.