Niche finance leaders: 3 buys and 1 hold

Article Excerpt

These four firms provide vital services to banks, credit card companies and other financial clients. They’re also market leaders with well-established brands, which makes it hard for competitors to lure away their customers. Even so, not all of them are buys right now. STATE STREET CORP. $68 (New York symbol STT; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 423.5 million; Market cap: $28.8 billion; Price-to-sales ratio: 3.0; Dividend yield: 1.8%; TSINetwork Rating: Average; www.statestreet.com) sells accounting and administrative services to large institutional investors, like mutual funds and pension plans. The company’s fee income rises and falls with the value of the mutual funds and other securities it administers. Thanks to improving stock markets and new contracts, its assets under custody and administration rose to $28.4 trillion as of June 30, 2014, up 10.3% from a year earlier. These gains offset the lower interest income the company earned on bank deposits and certain securities. As a result, its overall revenue rose…

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