The financial sector is experiencing robust growth, driven by the evolving needs of individuals and businesses alike. With the surge in digital technologies, more accessible loan options, and payment systems that are quicker and easier to use, it’s no surprise that the industry is expanding rapidly.

The financial market is expanding owing to the evolving demands of both individuals and organizations. Moreover, the rising adoption of digital technologies, broad access to various loans, and the availability of easier and more accessible payment options are helping the industry grow.

Below, I have highlighted three lesser-known financial stocks with strong upside potential, namely, Northern Trust Corporation (NTRS), Morningstar, Inc. (MORN), and Old Republic International Corporation (ORI).

In order to stay ahead in an increasingly competitive environment, financial firms are doubling down on digital transformation, streamlining processes, and investing in big data analytics to enhance customer service. These efforts align with the robust growth of the global financial services market, which is expected to hit $35.86 trillion this year. Further, this market is projected to reach $47.35 trillion by 2029, growing at a CAGR of 7.2%.

Moreover, the rise in digital payments and online transactions offers substantial growth prospects for consumer finance companies. With the global consumer finance market projected to hit $2.53 trillion by 2033, growing at a CAGR of 7.1%, companies are capitalizing on increased consumer spending and expanded access to digital banking platforms.

Bullish investor sentiment around the industry is evident in the Financial Select Sector SPDR ETF’s (XLF) 16.6% returns over the past six months versus the SPDR S&P 500 Trust ETF’s (SPY) 5.8% gains.

Given this backdrop, let’s discuss the fundamental aspects of the above-mentioned stocks in detail:

Northern Trust Corporation (NTRS)

NTRS provides wealth management, asset servicing, asset management, and banking solutions to corporations, institutions, families, and individuals worldwide. It operates in two segments: Asset Servicing and Wealth Management.

On December 16, 2024, the company signed a three-year Memorandum of Understanding (MoU) with the National University of Singapore to advance green finance and blockchain technology adoption. The partnership focuses on innovation in ESG finance, with a key initiative to tokenize green bonds using NTRS’ Matrix Zenith platform to enhance transparency and streamline regulatory reporting.

Moreover, the collaboration highlights NTRS’ commitment to sustainable investment practices, aiming to develop frameworks for tokenizing green assets and improving accountability in ESG portfolios.

In the fiscal 2024 third quarter that ended on September 30, NTRS’ total revenue increased 13.6% year-over-year to $1.97 billion. The company reported net interest income of $569.40 million, indicating a 21.3% growth from the prior-year quarter. NTRS’ net income came in at $464.90 million, up 41.8% year-over-year, while its earnings per share improved 49% from the year-ago value to $2.22.

Street expects NTRS’ revenue for the fiscal fourth quarter (ended December 2024) to increase 23.6% year-over-year to $1.93 billion. Its EPS for the same period is expected to register a 39.4% growth from the prior year, settling at $2.03. In addition, it surpassed the EPS estimates in three of the trailing four quarters, which is promising.

Over the past nine months, the stock has surged 21.2%, closing the last trading session at $101.63.

Out of 13 analysts that rated NTRS, two rated it Buy, while 10 rated it Hold. The 12-month median price target of $111.79 indicates a 10% upside potential from the last closing price. The price targets range from a low of $105 to a high of $125.

NTRS’ POWR Ratings reflect these prospects. The stock has an overall rating of C, which equates to Neutral in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It also has a B grade for Momentum and is ranked #14 out of 47 stocks in the Asset Management industry. Click here to see the additional ratings for NTRS (Growth, Value, Stability, Sentiment, and Quality).

Morningstar, Inc. (MORN)

MORN provides independent investment insights globally through five segments: Morningstar Data and Analytics; PitchBook; Morningstar Wealth; Morningstar Credit; and Morningstar Retirement. It offers managing investments, including mutual funds, ETFs, model portfolios, equities, and fixed-income securities, serving diverse financial needs.

On January 13, 2025, MORN launched the Direct Advisory Suite, a modern software solution designed for financial advisors and investment professionals. Built on the Direct Platform, it simplifies research, portfolio analysis, and client proposal generation, offering an intuitive interface and enhanced features to improve advisor workflows and efficiency. This move is likely to boost client retention, attract new users, and generate additional revenue streams.

On December 06, 2024, the company increased its quarterly dividend by 12.3% to 45.5 cents per share, payable to its shareholders on January 31, 2025. With 14 years of consecutive dividend growth, MORN pays an annual dividend of $1.82, which translates to a yield of 0.56% at the current share price. Its four-year average dividend yield is 0.55%. Moreover, its dividend payouts have increased at a CAGR of 8.6% over the past five years.

MORN’s revenue increased 10.5% year-over-year to $569.40 million in the third quarter, which ended on September 30, 2024. Its adjusted operating income rose 41.6% from the year-ago value to $130.30 million. The company’s net income amounted to $119.70 million, indicating a 206.1% improvement from the prior-year quarter, while its adjusted net income per share grew 56.3% year-over-year to $2. Also, its free cash flow improved 53.6% year-over-year to $155.80 million.

Analysts expect MORN’s revenue for the fiscal year 2024, which ended on December 31, to increase 11.2% from the year-ago value to $2.27 billion. Its EPS estimate of $7.84 for the same period indicates a 53.2% year-over-year growth. Moreover, for the fiscal year 2025, both its revenue and EPS are expected to grow by 8.2% and 16% from the prior year to $2.45 billion and $9.09, respectively.

The stock has gained 18.4% over the past year to close the last trading session at $324.58. Its 12-month price target of $380 reflects a 17.1% potential upside.

It’s no surprise that MORN has an overall rating of B, which equates to a Buy in our POWR Ratings system. It also has a B grade for Stability, Sentiment, and Quality. Out of 85 stocks in the Financial Services (Enterprise) industry, MORN is ranked #10.

Beyond what is stated above, we’ve also rated MORN for Growth, Value, and Momentum. Get all MORN ratings here.

Old Republic International Corporation (ORI)

ORI engages in the insurance underwriting and related services business, primarily in the United States and Canada. It operates through three segments: General Insurance, Title Insurance, and the Republic Financial Indemnity Group Run-off Business.

On January 6, 2025, ORI announced the launch of a new subsidiary, Old Republic Cyber, Inc., to offer specialized Cyber and Technology Errors & Omissions (E&O) insurance. Led by CJ Pruzinsky as President and Kevin McGowan as Executive Vice President and Chief Underwriting Officer, the subsidiary aims to expand ORI’s expertise in Cyber- and Technology-related coverage, aligning with its specialty strategy and commitment to underwriting excellence.

On December 16, 2024, buoyed by its strong financial performance, the company paid a quarterly dividend of $0.265 per common share. The company pays a $1.06 per share dividend annually, translating to a 3.07% yield on the current share price. Its four-year average dividend yield is 7.21%.

The company’s dividend payouts have grown at a CAGR of 6.4% over the past three years and 5.8% over the past five years. The current annualized rate marks the 43rd consecutive year that the company has increased this rate, while 2024 became the 83rd year of uninterrupted regular dividend payments.

For the fiscal third quarter that ended September 30, 2024, ORI’s total operating revenues increased 10.1% year-over-year to $2.14 billion. Its total revenues amounted to $1.80 billion, indicating an increase of 33% from the same period last year. The company’s net income stood at $338.90 million or $1.32 per share, indicating a considerable improvement from the prior year quarter. Also, its net premiums and fees earned for the quarter stood at $1.93 billion, up 9.6% year-over-year.

The consensus revenue estimate of $2.11 billion for the fiscal fourth quarter (ended December 2024) represents an 8.9% increase year-over-year. The consensus EPS estimate of $0.69 for the same quarter indicates a marginal improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue estimates in each of the trailing four quarters.

ORI shares have surged 17.8% over the past nine months to close the last trading session at $34.55. Its 12-month price target of $41 reflects an 18.7% potential upside.

ORI’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.

It has an A grade for Momentum and is ranked #11 out of 55 stocks in the A-rated Insurance – Property & Casualty industry. Click here to see the other ratings of ORI for Growth, Value, Stability, Sentiment, and Quality.

What To Do Next?

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NTRS shares were trading at $106.43 per share on Wednesday afternoon, up $4.80 (+4.72%). Year-to-date, NTRS has gained 3.83%, versus a 1.28% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

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