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3 Financial Stocks Worth Flirting With

AIG, SAN and WFC would look tempting after a small pullback

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Financial stocks burned many investors amid the market mayhem of 2008-09. Then in 2012, big banks came roaring back at last with dramatic gains. So will the momentum last?

Not for some.

Even if you figure they will hang tough, it’s hard to imagine some of the high-fliers repeating their performance — the 100% gains for Bank of America (NYSE:BAC) and 50% gains for Citigroup (NYSE:C) have many investors skeptical after their amazing crashes and burns in the wake of the financial crisis and failure to retain anything close to pre-crisis stock pricing. And given the difficult regulatory environment and short-term troubles weighing on lending, it seems unlikely a secular recovery in financials could lift bank stocks significantly in 2013.

However, a handful of picks in the financial sector are looking particularly strong after earnings relative to their peers. And a few picks in the sector have unique circumstances that make them compelling value plays, even if growth might not be easy to come by.

Three financial picks I’m watching now are Wells Fargo (NYSE:WFC), American International Group (NYSE:AIG) and Banco Santander (NYSE:SAN). These might not be great buys right now at current pricing, but a 5% to 10% pullback could provide a great opportunity for entry.

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