While most industries struggle amid a rising interest rate environment, the financial sector benefits. So, I think it might be ideal to buy AssetMark Financial Holdings, Inc. (AMK) and Atlanticus Holdings Corporation (ATLC), considering their strong fundamentals.
The global financial services industry is expected to grow at a CAGR of around 6% until 2028, owing to the increasing demand for cheaper loans and other financial services. The market in the United States is aided by the finance planning and advice market in the region.
Moreover, the financial services sector is accelerating its adoption of digital technology. Paying with cash, participating in in-personal meetings with financial consultants, and even using an ATM are all fading facets of financial services.
And with financial activity becoming increasingly digitized, especially as consumers are choosing to manage their finances from home, financial institutions and startups are sharpening their technology and expanding remote services.
Take a look at the stocks mentioned above:
AssetMark Financial Holdings, Inc. (AMK)
AMK provides wealth management and technology solutions in the United States. The company offers an open-architecture product platform, as well as client advice, asset allocation options, practice management, support services, and technology to the financial adviser channel.
On May 11, 2023, AMK announced the addition of First Trust, one of the industry’s largest actively managed exchange-traded fund (ETF) providers and innovators, to its platform.
“First Trust is known for providing trusted investment products and advisory services as well as for their focus on the needs of financial professionals and their clients,” said David McNatt, EVP of Investment Solutions for AMK.
Its trailing-12-month asset turnover ratio of 0.44x is 125.3% higher than the 0.20x industry average. Its trailing-12-month EBITDA margin of 27.20% is 32% higher than the 20.60% industry average.
During the fiscal first quarter ended March 31, 2023, AMK’s total revenue increased 19.1% year-over-year to $176.56 million. Its adjusted net income increased 37.9% year-over-year to $39.70 million. Its adjusted earnings per share increased 35.9% year-over-year to $0.53.
AMK’s revenue is expected to increase 25.1% year-over-year to $138 Million for the fiscal second quarter ending June 2023. The company’s EPS for the same quarter is expected to increase 30.9% year-over-year to $0.58.
Shares of AMK have gained 50.4% over the past year to close the last trading session at $28.41.
AMK’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Growth, Stability, and Sentiment. It is ranked #10 out of 49 in the Consumer Financial Services industry.
Beyond what is stated above, we’ve also rated AMK for value, Quality, and Momentum. Get all AMK ratings here.
Atlanticus Holdings Corporation (ATLC)
ATLC provides credit and related financial services and products to customers the United States. It operates in two segments, Credit as a Service, and Auto Finance.
Its trailing-12-month gross profit ratio of 73.37% is 24.9% higher than the 58.72% industry average. Its trailing-12-month net income margin of 32.03% is 24.4% higher than the 25.75% industry average.
ATLC’s total revenue increased 13.6% year-over-year to $261.04 million in the fiscal first quarter that ended March 31, 2023. Its net income came in at $25.89 million and Net income attributable to common shareholders per common share came in at $1.08.
ATLC’s revenue is expected to increase 0.08% year-over-year to $270.24 million for the fiscal second quarter ending June 2023. The company’s EPS for the same quarter is expected to come to $0.66.
The stock has gained 17.1% year-to-date to close the last trading session at $30.68.
ATLC’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
ATLC has a B grade for Value and Quality. It is ranked #8 in the same industry.
Click here to see the additional POWR Ratings for ATLC (Sentiment, Growth, Momentum, and Stability).
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AMK shares were trading at $28.57 per share on Friday morning, up $0.16 (+0.56%). Year-to-date, AMK has gained 24.22%, versus a 10.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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