Several macroeconomic concerns have been hurting investor sentiments of late. These matters have led to a bearish stance toward the overall stock markets, with the Finance sector not untouched.
Issues like the inversion of the yield curve along with the escalating U.S.-China trade war have been negatively impacting investor sentiments over the past several days. Moreover, other concerns like continued protests in Hong Kong, uncertainty related to Brexit and slump in the Eurozone economy among others have made investors apprehensive.
Thus, over the past month, the S&P 500 Index has lost nearly 5% and the S&P 500 Financials (Sector) Index has dipped more than 8%. Moreover, the Zacks Finance Sector has lost nearly 6% over the same period.
While these concerns are weighing on investors’ minds, leading to sell-off in finance stocks, the sector still has growth potential.
The fundamental strength of the companies in the finance sector is expected to support performance in the upcoming quarters.
Finance companies are making efforts to streamline operations and expand business (organically and inorganically) to diversify footprint and revenue base. In fact, lower corporate tax rates along with the easing of stringent regulations are likely to keep supporting profitability.
Moreover, several finance sector companies are undertaking measures to align their businesses for technology driven clients. They are spending substantially on technology to upgrade and add advanced features. This is expected to lower costs and improve operating efficiency.
In fact, the U.S. economy is growing against expectations of a slowdown. With the health of the nation being the main driving factor for finance companies’ profitability, this will continue to provide support.
Choosing the Winning Stocks
Based on the above-mentioned positives, we can say that investors are not correct in selling all the finance stocks right away.
With the help of the Zacks Stock Screener, we have selected finance stocks that investors can consider based on fundamental strength and solid prospects. While the stocks have declined more than 5% over the past month, these have current-year earnings growth expectation of 12% or more.
Further, all these stocks have a Zacks VGM Score of A or B and currently carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Here are four stocks worth considering:
Headquartered in Memphis, TN, First Horizon National Corporation FHN is a financial services company, which offers banking as well as investment and advisory services. It has a VGM Score of A and has lost 5.7% over the past month. The company’s earnings are expected to grow 12.8% in 2019. It currently carries a Zacks Rank of 2.
Cigna Corporation CI also carries a Zacks Rank #2 at present. This insurance provider, based in Bloomfield, CT, has a VGM Score of B. The company’s current-year earnings are projected to increase 17.8%. Its shares have declined 15.1% over the past month.
Shares of Ally Financial Inc. ALLY have lost 8.8% over the past month. The Detroit, MI-based company is a diversified financial services provider of a broad array of financial products and services primarily to automotive dealers and their customers. Its earnings are expected to grow 12% in 2019. The company has a VGM Score of B and a Zacks Rank of 2 at present.
Och-Ziff Capital Management Group Inc. OZM is an investment management company based in New York. Its shares have lost 12.2% over the past month. The stock has a VGM Score of B. The company’s earnings are expected to jump more than 100% in 2019. The stock currently sports a Zacks Rank #1.