Robinhood has been rapidly gaining market share and winning over younger investors, especially with its new prediction market segment.
Charles Schwab has been a staple for more than 50 years, and it continues to ride the momentum of high trading volume.
JPMorgan Chase is approaching a $1 trillion market cap and still trades at a compelling valuation.
Financial stocks rely on people regularly spending, saving, and investing their money. Fintech is the latest innovation that has helped big banks reach new customers while letting smaller companies quickly accumulate market share.
The financial sector is full of options, but these three picks offer buy-and-forget potential through 2030.
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Robinhood (NASDAQ: HOOD) has been quite a volatile stock. It was down by more than 40% earlier in the year but has since recovered all those losses, registering an 8% gain this year.
The company, which started as an online securities trading platform, has 13 businesses that generate more than $100 million in annualized revenue, including its red-hot prediction markets segment. This part of the business quickly evolved from a tiny slice of sales to more than 10% of revenue within a year. Revenue from this division rose more than 1,000% year over year in the second quarter.
Although Robinhood's prediction market segment captures the most headlines, established parts of its business continue to perform well. Overall revenue increased 32% year over year, with options and equity-related revenue up by 29% and 95%, respectively.
The fintech company continues to attract young customers. A 7% increase in the total number of funded customers is a testament to that fact. Although Robinhood still makes most of its money from investing-related transactions, the company is branching out to other financial products and services in a bid to become the top one-stop shop for consumers.
Charles Schwab (NYSE: SCHW) has been a staple for investors for more than 50 years. The discount brokerage firm makes it easy to open trading, retirement, and other investment accounts.
The financial company also happens to trade at a reasonable price-to-earnings (P/E) ratio of 20 while having annualized 18% revenue growth during the past five years.
Recent financial results suggest that Schwab's growth trajectory will continue. The company delivered 21% year-over-year revenue growth that came on the back of a 47% boost in net core assets. As total assets rise, Schwab makes more revenue from fees, and more assets can also increase the number of transactions. A 57% increase in average daily trading volume demonstrates that more assets translate into higher engagement rates.
Schwab's total client assets reached $13.1 trillion in the second quarter. That kind of competitive strength is hard to match, and it implies that Schwab will continue to gain market share in the years ahead. The company even launched Schwab Crypto to attract more users who want to invest some of their money in cryptocurrencies.
JPMorgan Chase (NYSE: JPM) is about to become the first bank stock to reach a $1 trillion valuation. The original JPMorgan was founded in 1871, and after many acquisitions, it has become the largest U.S. bank.
The company continues to attract capital from investors and savers. While average deposits rose a modest 3% year over year, JPMorgan Chase's client investment assets rose 21%. Investment activity has driven some of the highest growth rates for the bank, with equities revenue up by 86% year over year.
JPMorgan Chase is what every financial company aspires to become. The corporate giant is well-entrenched in every part of consumers' lives. It originates loans, issues credit cards, offers brokerage accounts, and provides a wide range of additional products. Chief Executive Officer Jamie Dimon told investors in the Q2 press release that "revenue in each line of business hit a new record."
The stock is up 11% year-to-date and with a market cap of more than $950 billion it's close to entering the trillion-dollar club. Although smaller, higher-growth fintech companies have the potential to outperform it, JPMorgan Chase offers a better margin of safety with its conservative 15.4 P/E ratio.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Charles Schwab is an advertising partner of Motley Fool Money. Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Charles Schwab and recommends the following options: short September 2026 $95 calls on Charles Schwab. The Motley Fool has a disclosure policy.