Sticky inflation, a higher for longer interest rate outlook from the Fed, and energy costs linked to Middle East tensions are reshaping how investors think about banks and insurance stocks. With headline inflation at 4.1% and core inflation at 3.4%, and no clear sign of quick rate relief, the cost of money and risk pricing are front and center again. This article looks at three large, financially healthy Financials stocks from our screener that appear well aligned with this backdrop, and explains why some investors are watching them closely in light of the latest Fed commentary.

Reddit (RDDT)

Overview: Reddit operates a global online platform built around interest-based communities where users post questions, share links, images and videos, and discuss everything from hobbies and investing to local events, giving advertisers and partners access to highly engaged, topic-focused audiences.

Operations: Reddit generates US$2.47b in revenue from its internet information services, with about US$2.00b from the United States and US$476.29m from the rest of the world.

Market Cap: US$30.94b

Reddit stands out because its 126.8 million Daily Active Uniques are not just scrolling but actively producing detailed, searchable content that advertisers and AI partners can use. This helps explain why recent quarters featured strong revenue, wide net margins of 28.6% and solid return on equity of 22.3%. Data licensing deals with companies such as Google and OpenAI add an extra layer of potential, as renewal pricing and AI related products evolve, while the stock’s P/E and reliance on external funding make it more sensitive to sentiment and growth expectations than deposit funded banks. For investors who want to understand how this mix of user engagement, AI data demand and valuation risk fits together, there is more beneath the surface still to unpack.

Reddit’s mix of AI data deals, high margins and sentiment driven P/E leaves a lot going on beneath the headline user numbers, so it is worth reading the analysis report for Reddit to see what the market might be missing.

Toast (TOST)

Overview: Toast is a cloud-based platform that helps restaurants run their business, combining point of sale, online ordering and delivery, payroll and team management, inventory tools, and restaurant-grade hardware into one system that also integrates payments and conversational AI to handle guest orders and operations.

Operations: Toast generates US$6.45b in revenue from its Data Processing segment.

Market Cap: US$15.08b

Toast gives investors exposure to the shift toward fully digital, AI supported restaurant operations, with recurring software and payments revenue that has been growing alongside expanding customer locations and higher average spend per restaurant. Earnings growth has been strong, margins and return on equity are improving, and recent partnerships and product launches point to a business that is embedding itself more deeply into customers’ day to day workflows. However, the higher P/E, funding structure without deposits, hardware costs and competitive pressure from other fintech and point of sale providers mean this is not a risk free story.

Toast’s accelerating software and payments footprint could be masking an equally important question about how sustainable that expansion really is, so it is worth reading the analyst forecasts for Toast before the next twist in the story emerges.

Seagen (SGEN)

Overview: Seagen is a biotechnology company focused on developing and selling targeted cancer therapies, primarily antibody drug conjugates, that aim to deliver chemotherapy directly to tumor cells while limiting damage to healthy tissue.

Operations: Seagen generates about US$2.3b in revenue from the development and sale of pharmaceutical products, all reported from the United States.

Market Cap: US$43.15b

Seagen attracts attention because it is building a portfolio of marketed oncology drugs like ADCETRIS, PADCEV and TUKYSA, while also running a broad pipeline of next generation antibody drug conjugates that could expand into more tumor types and treatment lines. Forecasts point to fast revenue and earnings growth, with return on equity expected to move from losses today to positive territory. However, the stock trades on rich sales multiples and is currently unprofitable, with all liabilities funded through higher risk external sources rather than stable deposits. Combined with high CEO pay and the usual clinical, regulatory and safety uncertainties that come with cancer drugs, this creates a company where the potential opportunity is notable but not straightforward for investors comparing it with traditional Financials stocks.

Seagen’s accelerating oncology pipeline and rich sales multiples raise a clear question: is the current price fully reflecting what comes next, or overlooking key risks hiding in the analyst forecasts for Seagen?

The three stocks in this article are just a starting sample, and the full Simply Wall St screener has identified 55 more banks and insurance companies with equally compelling narratives inside the Financials (Banks and Insurance Companies) screener. With a few filters you can quickly identify the interest rate, earnings and balance sheet catalysts that matter most to you, helping you focus on the highest conviction opportunities in this part of the market.

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Seeking Alternatives Before Momentum Flies Past?

Fresh stock ideas can move from quiet to crowded fast, as breakouts build momentum and under the radar stories get caught by the crowd. Acting early can help investors explore opportunities while they are still developing.

• Look for early-stage potential in smaller companies before they gain wider attention by scanning the curated 22 elite penny stocks with strong financials and reviewing which stories may still be under the radar.
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• Explore the development of digital infrastructure by reviewing the focused 50 AI infrastructure stocks, which highlights companies involved in the data centers and hardware that support AI-related activity.

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.