Two Financial Services Giants Lead the Charge in the IBD 50

The IBD 50 list, a weekly ranking of top stocks based on earnings momentum, technical strength, and institutional interest, continues to highlight compelling investment opportunities in the financial services sector. Among the 50 names, two giants—American Express (AXP) and Citigroup (C)—stand out as leaders, combining strong fundamentals with strategic moves to capitalize on shifting market dynamics. Let’s unpack why these companies are capturing investor attention.

American Express (AXP): The Luxury Play with Legs

American Express is the highest-rated financial services company in the IBD 50, earning an A grade and posting a 2.31% weekly gain as of April 2025. The company’s appeal lies in its dual focus on premium credit cards and travel services, which have historically insulated it from broader economic volatility.

Recent moves underscore its strategic foresight. The expansion of Centurion Lounges—exclusive airport spaces for its high-end cardholders—signals a deepening of its luxury brand positioning. Meanwhile, discussions around potential insider sales (notably by executives) have sparked debate, though these could reflect routine wealth management rather than a lack of confidence.

Crunching the numbers: AXP’s revenue growth of 7% YoY in Q4 2024, driven by strong cardmember spending and fee income, supports its top-tier ranking. Analysts note its net interest margin of 5.8%—a robust figure for the sector—as a testament to efficient capital management.

Citigroup (C): The Turnaround Story Gaining Momentum

Citigroup, rated B in the IBD 50, has surged 3.27% weekly, reflecting investor optimism about its transformation under CEO Jane Fraser. The bank’s North America leveraged-loans desk hiring spree and broader focus on corporate and investment banking services highlight its push to regain its position as a top-tier global player.

Citigroup’s turnaround isn’t just about cost-cutting. The bank has doubled down on high-margin wealth management, where its $475 billion in client assets under management (as of Q3 2024) positions it to benefit from rising demand for sophisticated financial services.

Critics once dismissed C as too reliant on volatile trading revenue, but its 2024 net interest income growth of 9%—driven by higher rates and loan demand—has quieted skeptics. The stock’s price-to-book ratio of 1.3x, above its five-year average, suggests investors now see it as a value creator, not just a value trap.

Why Financials Dominate the IBD 50 Now

The IBD 50’s focus on financials isn’t random. The index prioritizes companies with accelerating earnings growth and strong technical charts, and both AXP and C fit the bill.

• AXP’s earnings surprise ratio (actual EPS vs. estimates) has averaged +12% over the past four quarters, a rare feat in a consumer discretionary-heavy sector.
• C’s efficiency ratio (costs relative to revenue) improved to 58% in Q4, down from 64% a year earlier, signaling operational discipline.

Moreover, the IBD 50’s inclusion of these stocks aligns with broader market trends. Financials often thrive in rising rate environments, and with the Fed’s policy stance uncertain but still elevated, banks and credit firms are positioned to benefit from margin expansion and loan demand stability.

The Bottom Line: These Financials Are Built for the Next Cycle

Both American Express and Citigroup are not just surviving—they’re evolving. AXP’s premium positioning and C’s operational turnaround make them cornerstones of a sector primed for growth.

For investors, the Innovator IBD 50 ETF (FFTY) offers an easy way to tap into this momentum. With 80% of its holdings in the IBD 50 stocks, including AXP and C, the ETF has returned 14.2% year-to-date as of April 2025, outperforming the S&P 500’s 5.8%.

While risks like a sudden rate cut or economic slowdown exist, the fundamentals of these financial titans suggest they’re built to weather volatility. In a market hungry for winners with proven growth, AXP and C are names that belong on every investor’s radar.

Data as of April 2025. Past performance does not guarantee future results.