In recent years, there has been no shortage of attention being given to the "Magnificent Seven" stocks. It's deserving, of course, given that they dominate their end markets, are extremely innovative, and are at the cutting edge of artificial intelligence initiatives. But investors shouldn't ignore opportunities in other pockets of the market.
Although it's not a trillion-dollar stock, here's a financial stock you shouldn't overlook.
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Posting solid financial results in a competitive industry
Investors are familiar with the fact that the financial services industry is very competitive. At a high level, it seems that every business offers the same products, which makes it hard to differentiate. And some dominant players at the top of the food chain have their hands in all areas of the market.
However, Ally Financial (ALLY +3.14%) has positioned itself as the leading digital bank. Its success has proven to be durable. One critical metric to follow is customer trends. The business had 3.5 million deposit customers as of Dec. 31. This was the 17th straight year of growth.
The company's deposit base is another impressive trait. Ally ended the fourth quarter with $144 billion in retail deposits, which provides it with a sticky and low-cost source of funding to power auto loans, the company's bread-and-butter lending product.
Ally's adjusted earnings per share jumped 62% in 2025. This can be attributed to a higher yield earned on retail auto loans and a lower yield paid on deposits. Consequently, net interest margin expanded from 3.27% in 2024 to 3.43% last year.
NYSE: ALLY
Key Data Points
Wall Street analysts are optimistic about Ally
The biggest risk facing Ally is its exposure to the automotive sector, leaving it influenced by changing macro winds. A recessionary scenario that really pressures households can present a headwind. Ally is performing well, though, and the prospect of accommodative monetary and fiscal policy helps.
For what it's worth, Ally's retail auto net charge-off rate was below 2% in 2025, demonstrating proper risk management. It handled a record 15.5 million consumer auto loan applications last year, indicating robust demand.
It's no surprise that Wall Street analysts are optimistic. The consensus forecast is for Ally's earnings per share to increase at a compound annual rate of 23.5% between 2025 and 2028. That can encourage investor bullishness, and it would build on last year's strong showing.
The market still isn't fully appreciating this business. Ally shares are currently trading at a price-to-book ratio of below 1. This looks like an opportunity that shouldn't be passed up.
