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Synchrony Financial vs. Visa: Which Consumer Finance Stock is a Better Buy?

Published 07/23/2021, 10:13 AM
Updated 07/23/2021, 11:31 AM
© Reuters.  Synchrony Financial vs. Visa: Which Consumer Finance Stock is a Better Buy?
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Consumer financial stocks have outperformed this year in part due to stimulus payments and also due to lower spending in certain categories during the pandemic. 2 of the top consumer financial stocks are Synchrony Financial (NYSE:SYF) and Visa (NYSE:V). Which is the better buy?.When the pandemic first hit our shores and it became clear that a shutdown would be necessary, consumer financial stocks were hit hard as there was an expectation that consumer spending would decline and defaults would spike.

However, this has turned out to not be the case. The economy did better than expectations, the stimulus was massive enough to send consumer spending to new highs and savings levels as well. Household leverage ratios are at low levels which bodes well for the expansion's duration.

If the labor market keeps improving and wages continue trending higher then the sector should keep outperforming. Within the sector are a variety of options. Companies like Synchrony Financial (SYF) take on credit risk, while consumer financial stocks like Visa (V) make money from each transaction.

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