With the Federal Reserve sending mixed signals on the next rate move and cash once again feeling like a meaningful asset class, short-duration U.S. fixed-income and cash management stocks are back in focus. This mix of rate uncertainty and steady CPI data has created a window that some investors will not want to miss. This article walks through 3 stocks exposed to the latest Fed and inflation news.

The stocks covered below are just a starting sample, and the full screen surfaced 8 more U.S. cash-management and short-duration fixed-income companies with equally compelling narratives that are not covered in this article. To go deeper on this theme, head straight into the Short-Duration U.S. Fixed-Income and Cash Management Firms screener to identify ideas, analyze the details, and focus on the highest conviction plays.

NewtekOne (NEWT)

Overview: NewtekOne is a bank holding company that focuses on small and medium sized businesses, offering a mix of traditional banking products alongside integrated services such as lending, payments, payroll, insurance and call center support through a largely digital platform.

Operations: NewtekOne generates the bulk of its approximately US$406 million in revenue from US operations, with around US$297 million from banking, supported by payments, alternative lending and corporate services.

Market Cap: US$370 million

NewtekOne provides focused exposure to small business banking and cash management at a time when elevated short term yields keep deposits, payment flows and short duration loans in the spotlight. The stock currently screens as undervalued on several metrics, with management reaffirming earnings guidance and implementing partnerships such as the Payroc agreement to support its digital, branchless model. At the same time, heavy use of SBA and government backed lending, non cash earnings and reliance on external funding leave the business sensitive to policy changes and funding costs. For investors seeking exposure to SME finance in the context of a firm rate backdrop, this company may warrant closer consideration.

NewtekOne’s branchless model and reaffirmed earnings guidance have investors talking, but the real story may sit in how its valuation lines up with those SBA heavy cash flows and policy sensitivities in the DCF valuation analysis for NewtekOne

Build your own shortlist of undervalued cash management stocks

NewtekOne and the two other stocks in this article all surfaced from a single Simply Wall St screener, which is exactly the kind of starting point you can customize for yourself. Use our flexible Screener to combine filters like valuation, quality, and risks, or jump straight into any of our curated Investing Ideas.

Alerus Financial (ALRS)

Overview: Alerus Financial is a long established U.S. bank holding company that serves businesses and consumers with a mix of traditional banking, retirement and benefit services, and wealth management, all tied together through deposit, lending, cash management, and advisory solutions.

Operations: Alerus Financial generates about US$147 million from Banking including mortgage, US$69 million from Retirement and Benefit Services, and US$29 million from Wealth Advisory Services, with all of its roughly US$242 million in revenue coming from the United States.

Market Cap: US$843 million

Alerus Financial offers exposure to elevated short term rates through a diversified model that spans deposits, cash management, loans, and fee based retirement and wealth services, at a time when investors are again paying attention to cash like solutions. Analysts expect strong earnings and revenue growth, supported by technology and platform investments and by rising demand for retirement and benefit services, yet the stock trades well below some value estimates and carries a history of weaker recent earnings and low ROE. Credit costs, deposit competition, and fee income sensitivity remain important swing factors. If you are looking for a bank where growth expectations and risk questions are both front and center, this is one to examine more closely.

Alerus Financial sits at the intersection of current growth expectations and questions about past earnings. Before you decide how that story plays out, review the analyst forecasts for Alerus Financial and see what the market might be missing.

Corebridge Financial (CRBG)

Overview: Corebridge Financial is a U.S. retirement and insurance company that offers annuities, life insurance, group retirement plans, and institutional solutions that help individuals and institutions manage long term savings and income needs.

Operations: Corebridge Financial generates about US$6.6b from Individual Retirement, US$6.8b from Institutional Markets, US$4.2b from Life Insurance, US$2.6b from Group Retirement, and a small contribution from Corporate & Other and Unallocated Adjustments.

Market Cap: US$15.1b

Corebridge Financial sits at the crossroads of retirement demand and interest rate policy, which makes it a stock to watch as the Fed weighs its next move. The company runs large fixed income portfolios that can benefit from higher short term yields, is using buybacks and a capital light model in an effort to support earnings resilience, and is working through a merger with Equitable that management expects to bring cost synergies. At the same time, reliance on external funding, pressure on variable investment income and board inexperience keep risk in the picture. For investors interested in retirement income trends with a spread based focus, this is a story that may warrant further research.

Corebridge Financial combines retirement demand with rate sensitive fixed income portfolios, yet many investors may be missing how that mix really stacks up against its funding and governance risks in the 3 key rewards and 2 important warning signs (1 is major!)

Seeking Alternatives Before The Crowd Moves

Fresh ideas move first. The best breakout stories often gain momentum quietly, then are flying before most notice. Spot stocks still under the radar for now and act now.

• Hunt for companies already building strong cash flows and balance sheets before they get widely recognized by using the curated list of solid balance sheet and fundamentals (49 results).
• Ride the potential momentum in early stage miners and producers that could benefit if gold prices keep investors’ attention by scanning the focused 30 elite gold producer stocks.
• Get ahead of the next leg of automation and factory upgrade cycles by zeroing in on companies inside the targeted 39 robotics and automation stocks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.