12/18/2012

My Best Financial Stock Picks For 2013 | Do Financial Stocks Recover?

Buy shares low, hold them and sell high. That’s a very easy and simple strategy but investing is much more than buying stocks and waiting until the price goes up. You have to select the best stocks by fundamentals, business model, market strength, price ratios and so on. Investing is hard work and your emotions shouldn’t be a part of your selection process. Do you lose money with a trade? Don’t care that’s part of the business of a stock trader. Take care that your single trade positions are not big in relation to your trading limits or margins. They should account for less than 1 percent of your net worth.

Today, I like to screen the financial sector by the best growth stock picks for 2013. The whole sector has too many stocks listed, around 2,868 - No wonder that we need a consolidation with the financial crisis. Stocks from the sector are totally valuated at 168.25 trillion. The average P/E amounts to 13.04 and the yield is 2.45. What do you think, are stocks from the financial sector cheap or right to buy now? Let me know in the comment box bellow.

These are my criteria:

- Forward P/E under 15
- Past 5Y Sales growth over 10 percent
- Earnings per share growth for the next five years over 10 percent
- Operating Margin over 10 percent
- Market Capitalization over 2 billion

Eleven stocks remain of which six have a current buy or better rating. Ten of the results pay dividends. I am not a big fan of financial stocks because I could not evaluate the risks of the banking assets. I like stocks from services stocks with financial relations like Thomson Reuters, Moodys or Nasdaq.

Here are my favorite stocks:
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BlackRock (NYSE:BLK) has a market capitalization of $35.82 billion. The company employs 10,400 people, generates revenue of $9.081 billion and has a net income of $2.339 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.543 billion. The EBITDA margin is 39.02 percent (the operating margin is 35.78 percent and the net profit margin 25.76 percent).

Financial Analysis: The total debt represents 3.54 percent of the company’s assets and the total debt in relation to the equity amounts to 25.41 percent. Due to the financial situation, a return on equity of 9.05 percent was realized. Twelve trailing months earnings per share reached a value of $12.86. Last fiscal year, the company paid $5.50 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.96, the P/S ratio is 3.83 and the P/B ratio is finally 1.46. The dividend yield amounts to 2.92 percent and the beta ratio has a value of 1.49.


”Long-Term
Long-Term Stock History Chart Of BlackRock (BLK)
”Long-Term
Long-Term Dividends History of BlackRock (BLK)
”Long-Term
Long-Term Dividend Yield History of BlackRock (BLK)

NASDAQ OMX Group (NASDAQ:NDAQ) has a market capitalization of $4.07 billion. The company employs 2,503 people, generates revenue of $3.438 billion and has a net income of $383.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $787.00 million. The EBITDA margin is 22.89 percent (the operating margin is 19.72 percent and the net profit margin 11.14 percent).

Financial Analysis: The total debt represents 15.02 percent of the company’s assets and the total debt in relation to the equity amounts to 42.54 percent. Due to the financial situation, a return on equity of 7.98 percent was realized. Twelve trailing months earnings per share reached a value of $1.99. Last fiscal year, the company paid $0.00 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.41, the P/S ratio is 1.18 and the P/B ratio is finally 0.86. The dividend yield amounts to 2.11 percent and the beta ratio has a value of 0.84.


”Long-Term
Long-Term Stock History Chart Of NASDAQ OMX Group (NDAQ)
”Long-Term
Long-Term Dividends History of NASDAQ OMX Group (NDAQ)
”Long-Term
Long-Term Dividend Yield History of NASDAQ OMX Group (NDAQ)

Discover Financial (NYSE:DFS) has a market capitalization of $20.28 billion. The company employs 11,650 people, generates revenue of $6.345 billion and has a net income of $2.226 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $4.106 billion. The EBITDA margin is 64.71 percent (the operating margin is 49.69 percent and the net profit margin 31.51 percent).

Financial Analysis: The total debt represents 26.66 percent of the company’s assets and the total debt in relation to the equity amounts to 222.48 percent. Due to the financial situation, a return on equity of 29.96 percent was realized. Twelve trailing months earnings per share reached a value of $4.32. Last fiscal year, the company paid $0.20 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 9.30, the P/S ratio is 2.87 and the P/B ratio is finally 2.58. The dividend yield amounts to 1.00 percent and the beta ratio has a value of 1.44.


”Long-Term
Long-Term Stock History Chart Of Discover Financial (DFS)
”Long-Term
Long-Term Dividends History of Discover Financial (DFS)
”Long-Term
Long-Term Dividend Yield History of Discover Financial (DFS)

Take a closer look at the full list of the best financial stock picks for 2013. The average P/E ratio amounts to 13.34 and forward P/E ratio is 11.53. The dividend yield has a value of 2.78 percent. Price to book ratio is 2.53 and price to sales ratio 2.82. The operating margin amounts to 32.65 percent and the beta ratio is 1.29. The average stock from the screening results has a debt to equity ratio of 2.18.

Here is the full table with some fundamentals (TTM):

Best Financial Stock Picks For 2013 (Click to enlarge)

If you like this list, please give us a Facebook Like, make a tweet or post a comment below!

Related stock ticker symbols:
SAN, FNFG, WDR, BLK, CG, NDAQ, JEF, BAP, DFS, BBD, ASPS

Selected Articles:

* I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.

1 comment:

  1. Anonymous12/18/2012

    Following the announcement of the U.S. Federal Reserve's latest quantitative easing program QE3 on September 12, 2012, financial shares leaped forward, with the Dow Jones U.S. General Financial Index (^DJUSFN) increasing by 3% in two days from 293.81 on September 12, 2012 to its recent high of 302.65 on September 14, 2012. For the time being, I would not buy financial stocks because the financial crises still goes on.

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