CACC

Wells Fargo is facing a Department of Housing and Urban Development (HUD) investigation into its fair-lending practices, specifically allegations that it offered different lending products based on race. The probe centers on the bank's $60 billion initiative to increase Black homeownership, which HUD claims involved discriminatory 'sorting' practices. The investigation comes as Wells Fargo has made significant regulatory progress, including terminating 14 consent orders since 2019 and having its asset cap lifted by the Federal Reserve in June 2025.

Encore Capital Group (ECPG) has surged 73.8% YTD, outperforming peers and the S&P 500. The company benefits from robust U.S. portfolio supply, record collections of $1.46B, and raised 2026 guidance for $1.40-$1.50B in purchases and $13-$14 GAAP EPS.

However, heavy U.S. concentration (85.3% of purchases), rising legal expenses (+25.8% YoY), and funding costs pose risks. ECPG trades at a forward P/E of 6.58X, below industry average, and carries a Zacks Rank #2 (Buy) rating.