It has not been a great year so far for financial stocks, with the sector down about 10% year to date.
Consumer finance stocks, which include many fintechs, are some of the worst performers, dragging down the sector with a decline of 21% year to date.
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Some of the hardest hit in this area are Robinhood (NASDAQ: HOOD), down 39%, Affirm (NASDAQ: AFRM), down 40%, and SoFi (NASDAQ: SOFI), down 38% year to date. All three of these stocks had strong returns in 2025, and their valuations spiked. Along with seeing these stocks as overvalued, investors are concerned about a sluggish economy, rising credit risk, inflation, lower trading in a down market, and regulatory uncertainty, to name a few issues.
Investors looking for exposure within financials may want to seek out other areas of the sector that may be less prone to credit risk, down markets, and the economy. Here are three great choices.
I’m going to lump these two together because they are very similar.
Visa (NYSE: V) and Mastercard (NYSE: MA) are the two largest payment processors. According to Motley Fool research, the two companies account for 76% of credit card purchase volume in the U.S. and 69% of all cards in circulation. So, they basically have a duopoly.
They are different from other credit card companies and consumer finance firms in one huge way — they aren’t lenders, so they have no credit risk. They make money from swipe fees every time a card is used on their global networks.
They also aren’t particularly vulnerable to an interest rate cap, as floated by President Donald Trump.
The major headwind for Visa and Mastercard would be a recession or economic downturn, where volume drops. But historically, both of these payment processing giants have fared well during downturns because, while spending may be down, people still use debit and credit cards during downturns.
In the last two down years for the S&P 500 — 2022 and 2018 — both Visa and Mastercard outperformed the benchmark.
And in their outlooks for fiscal 2026, both companies expect robust consumer spending and double-digit percentage earnings growth. One thing to watch for is the Credit Card Competition Act, which would require banks to offer at least two payment networks for merchants to process transactions, including one outside of Visa and Mastercard. This has been stalled in Congress for years, but it bears watching as it could have an impact.
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Both of these companies have huge margins because they are asset-light, so they have lots of cash flow to navigate downturns. Also, they are both reasonably valued, and analysts are extremely bullish on them.
Some 93% of analysts rate Mastercard a “buy” with a median price target of $669 per share, which would indicate 34% upside. Roughly 92% rate Visa a “buy” with a median price target of $408 per share, which would also represent 34% upside.
Another good play right now is Standard & Poor’s Global (NYSE: SPGI). This is another stock that is protected by moats as one of two dominant players in the credit ratings business, along with Moody’s (NYSE: MCO). Together, S&P Global and Moody’s control 80% of the market.
S&P Global is also a dominant player in its indexing business, as the owner of the S&P indexes, and it has a robust market intelligence division that tends to perform well when markets are down. This combination gives S&P Global a balance of revenue streams that has typically served it well under a variety of market conditions.
Credit issuance is predicted to rise 5% in 2026, which is down from 12% last year, but the demand to build AI infrastructure will continue to be a major driver. There are some concerns about AI disruption in the market intelligence business, but some analysts think this is overblown, especially for firms like S&P Global, which has proprietary data and will likely use AI rather than be decimated by it.
As an added benefit, S&P Global is a Dividend King, having raised its dividend for 53 years in a row.
The stock is also reasonably valued, and like Visa and Mastercard, analysts are very bullish on S&P Global. It is rated a buy by 93% of analysts and has a median price target of $546 per share, which would suggest a 33% gain.
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Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard, S&P Global, and Visa. The Motley Fool has a disclosure policy.
My Top 3 Financial Stocks After the Latest Market Pullback was originally published by The Motley Fool
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