Buy These 3 Financials As An Alternative To The Big Banks

Although big banks are considered safer bets, given the reduced volatility in revenues due to their diversification in terms of geography, products, business line, industries, etc., there are always inherent risks involved. Bigger the size, bigger and more complex the issues are. Wells Fargo & Co WFC, considered a relatively stable name in the space, recently found itself entangled in the fraudulent accounts scandal.

At this juncture, Argus recommends three financials as alternative to big banks.

At a financial services conference call Wednesday, Steve Biggar, senior analyst at Argus Research, said Fiserv Inc FISV, which provides solutions for mobile and online banking, is in the sweet spot right now for bank technology spending. Citing its 5–6 percent revenue growth and double-digit revenue growth, Biggar said he thinks the business model is very scalable.

Related Link: Fidelity Has A Say In ETF Fee Tussle

On exchanges, Argus favors Intercontinental Exchange Inc ICE, which runs the New York Stock exchange. The firm views its recent acquisition of Interactive Data Corp. as a strong revenue growth driver. The firm also noted that the exchange is looking to branch out and be a little bit less reliant on overall trading volumes for its earnings and revenue growth.

Biggar views Charles Schwab Corp SCHW as a terrific asset gatherer. The analyst noted that it is taking a shot at both the discount and full-service brokers with low-cost ETF products, while also adopting the robo-adviser trend.

Argus believes the company has a good revenue trajectory. The firm also indicated that Charles Schwab is part of its Buy-rated universe in financials.

At Wednesday's last check, Fiserv was up 0.95 percent at $100.07 and Intercontinental Exchange was rising 0.61 percent to $267, while Charles Schwabb was slipping 0.45 percent to $31.75.

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