The finance sector, which has been in the spotlight since the U.S. Presidential election results, seems to be losing its shine. The Financial SPDR (NYSEARCA:XLF), which tracks the overall S&P Financial Select Sector Index, was down nearly 2.1% over the last one week while S&P 500 index remained marginally positive.
Wondering what could be the reason for this reversal? Let’s check what happened over the last week and decipher the reasons for the slump.
The most important event of last week was the Federal Reserve’s decision to hike interest rates for the second time in three months. Typically, the finance sector (except REITs) benefits from the rising rates. The steeper yield curve helps the financial stocks to improve revenues.
Then why has the scenario for the financial stocks been gloomy?
Basically, the market had been expecting the latest increase in rates. Also, the euphoria about the significant policy changes in the finance sector by the new administration seems to be gradually ending. The investors are now skeptical about whether the changes promised by the Trump administration will become a reality or not.
But, not all finance stocks performed badly. There were several stocks that remained in the green despite an overall gloomy picture, based on their fundamental strengths.
How to Pick Unscathed Financial Stocks
Just picking stocks on the basis of their price performance is not a good investment decision. One should check out the other factors before zeroing in on the profitable stocks.
So, we have taken the help of our Zacks Stock Screener to select the profitable ones. Through it we shortlisted finance stocks that witnessed a price increase of 2% or more over the last one week and have a VGM Score of ‘A’ or ‘B.’
Further, these finance stocks have market capitalization of $500 million or more. Also, the stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are the four stocks that fulfilled the above-mentioned screening criteria:
Lazard Ltd (NYSE:LAZ), with a market cap of $6 billion, is a financial advisory and asset management firm, operating across the globe. The company has a Zacks Rank #2 and a VGM Score of ‘A.’ The company‘s shares have risen almost 6%, over the last week.
Fidelity & Guaranty Life (NYSE:FGL), with a market cap of $1.6 billion, provides annuities and life insurance products in the U.S. It carries a Zacks Rank #2 and has a VGM Score of ‘A.’ Over the past one week, the company witnessed 3% increase in its share price.
With a market cap of $909.4 million, Greenhill & Co., Inc. (NYSE:GHL) operates as an independent investment bank for corporations, partnerships, institutions, and governments worldwide. The company has a Zacks Rank #2 and a VGM Score of ‘A.’ The company’s shares have increased 5.1%, in the past one week.
Primerica, Inc. (NYSE:PRI) distributes financial products to middle income households in the U.S. and Canada and has a market cap of $3.8 billion. The company has a Zacks Rank #2 and a VGM Score of ‘B.’ Shares of the company rose 3.8%, over the last one week.
Will You Make a Fortune on the Shift to Electric Cars?
Here’s another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It’s not the one you think.
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