Financial institutions and financial stocks haven’t been getting much press, other than the recent bad press from Wells Fargo & Co (NYSE:WFC).
But there is a handful of very good financial stocks to buy that are posting stunning numbers for the recent quarter and for the first half of 2017, with more expected through the end of the year.
Consumer spending is on the rise, the economy looks to be hitting its stride and the Federal Reserve is selling off its assets and raising rates — all of this bolsters the case for my six straight-A financial stocks to buy now.
They already have been performing well, and all this encouraging economic news will only add to their momentum.
These aren’t giant players in the industry but they are focused and nimble, which has made them very successful.
Straight-A Financial Stocks to Buy: Lazard (LAZ)
Lazard Ltd (NYSE:LAZ) has been on Wall Street since the 1850s. It was already in New Orleans, San Francisco and France by the end of that decade.
Obviously, a financial institution that survived the Civil War, major recessions, depressions and two world wars, has found a good business model. Lazard has focused on working with good clients to build strong businesses.
You would think that after all these years, Lazard would be a giant on Wall Street, but it only carries a $5 billion market cap. WFC, for example, sports a $253 billion market cap.
But Lazard has found a niche and it’s working very well. It has been a force in the M&A sector in recent years with deals like Dow Chemicals and DuPont, Gilead and Kite Pharma, and Sempra Energy and Oncor, on its books.
In late July LZD stock posted second-quarter and first-half numbers, which were huge — Q2 revenue surged 43% year-over-year; Q2 M&A revenue up 50%; first half financial advisory revenue was up 35% to record levels. All that and a very investor friendly 3.8% dividend yield.
Straight-A Financial Stocks to Buy: Moelis (MC)
Moelis & Co (NYSE:MC) stock is a relative newcomer to the investment banking game. But its strength is in finding cross-border deals and leveraging its global exposure. For example, India has a number of large companies that are in essence, insolvent to the tune of $180 billion.
The new Indian government wants to clear this dead weight off its books and MC is looking to get companies from outside of India to look at buying these distressed assets. MC is looking to get in on about $80 billion if it has its way.
It’s already having a banner year — Q2 revenue was up 31% year-over-year and first half revenue was up 34%. This is another niche investment bank player with strong M&A credentials.
It also delivers a healthy 3.7% dividend, making it a shareholder friendly firm as well.
Straight-A Financial Stocks to Buy: Health Insurance Innovations Inc (HIIQ)
Health Insurance Innovations Inc (NASDAQ:HIIQ) stock has been on a roll in 2017. It’s up 65%, which, considering it’s a healthcare insurance stock, is pretty impressive.
While the company has been around in various iterations for decades, HIIQ is really a company that has come into its own during the Obamacare era. As politicians and insurers and everyone else tried to figure out how to manage to affordably insure individuals that weren’t part of company-provided healthcare or couldn’t afford traditional healthcare insurance, HIIQ found a way to fill the vacuum.
It offers affordable, web-based individual healthcare plans. It’s a new idea, but it seems to be gaining traction. And because it’s a leading innovator in the space, that means states and the federal government are interested in its success.
Early last month it reported Q2 earnings that were hitting records — revenue was up 39% year over year, new policies up 39%, adjusted earnings per share up 70%. And it guided higher for the rest of the year.
Straight-A Financial Stocks to Buy: Green Bancorp (GNBC)
Green Bancorp Inc (NASDAQ:GNBC) stock has a market cap of $760 million, which doesn’t put it up with the big boys by any stretch. But the fact that the stock is moving like a tech stock — up 34% year to date — shows that it has found a solid niche.
While the GNBC has a dozen branches in and around Texas, its real growth engine is in the local real estate market. Through Q2 it was putting up very big numbers.
For example, net income nearly quadrupled in the first half of the year compared to the first half of last year. Net income for Q2 was up nearly 80%.
GNBC stock sold off as Hurricane Harvey made landfall and that will likely suppress the stock price for a bit, but it doesn’t change the fact that over the intermediate and long term Texas is one of fastest growing states in the US. A hurricane won’t change that.
Buy in over time as the recovery unwinds and the stock is cheap.
Straight-A Financial Stocks to Buy: The Carlyle Group (CG)
The Carlyle Group LP (NASDAQ:CG) started in 1987 as a private equity firm that had major families involved including the Bushes, the Saudi Royal family and others.
It was pretty quiet and a very ‘insider Washington’ company in the early days. But it has grown and gone public since those early days but has remained a well-connected and powerful global asset management firm.
Its name and pedigree mean it is always a player at the right tables and that’s evident in CG stock performance this year.
It’s up nearly 40% year to date but it’s sporting a current PE of 15. Add to that it’s stunning 8.6% dividend yield and you have a very shareholder friendly, well-respected business that has a very attractive stock.
Straight-A Financial Stocks to Buy: New Residential Investment (NRZ)
New Residential Investment Corp (NYSE:NRZ) stock hasn’t been doing all that well — up a little less than 6% year to date — but that is only part of the reason that NRZ is so attractive.
NRZ is set up as a real estate investment trust (REIT). That means it is obligated by law to return 90% of its earnings to its “owners” (shareholders) in the form of a dividend. And right now, that dividend is sitting at 12%.
As its name implies, NRZ is focused on residential real estate, rather than commercial. And its key focus is on mortgage servicing rights (MSAs). These are the rights for a company like NRZ to service the mortgages of lenders. NRZ then gets a fee and “Excess MSRs,” which amounts to an extra fee.
As the Federal Reserve unwinds all its mortgage backed securities, this is going to mean a massive expansion in business for NRZ, and much bigger gains.
— Louis Navellier
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Source: Investor Place