The financial stocks have offered investors an unforgettable roller coaster ride for the last year. And whether you were on board or just stood by watching, the sight has been spectacular. After careening lower on Lehman Brothers' drowning, AIG's (NYSE:AIG) swoon and Citigroup's (NYSE:C) flailings, the sector has recovered in impressive fashion.
IN PICTURES: Eight Ways To Survive A Market Downturn
But while the big names all the while grabbed the headlines (along with not a few small- and mid-sized outfits that filed for bankruptcy), there are still a great number of solvent financials that trade with noteworthy fundamentals - even after the S&P 500's near 60% since March. Here are just a few of them.
A Sterling Opportunity to Make Money
Sterling Bancorp (NYSE:STL) is the holding company for the Sterling National Bank, which conducts retail banking operations in New York, New Jersey and North Carolina. The bank's shares currently trade with a P/E ratio of 13 and have an annual yield of 5.5%. Price to Book is a mere 0.75 and price/sales only 0.93.
Medallion Financial Corp. (NYSE:TAXI) is in the business of providing loans to taxicabs for their licenses (or medallions). The shares trade with a very generous 9.3% annual dividend and a P/E of 15-times last year's earnings. TAXI stock trades below the breakup value of the company, with a P/B of just 0.86.
Medallion stock is up 150% since bottoming in March.
Another with Great Prospects
Prospect Capital Corporation (Nasdaq:PSEC) is another issue with great fundamentals. The company's shares trade with a P/E of 8.5 and continue to pay an annual dividend of 16%. The stock is up over 50% since bottoming in the first quarter of the year. Prospect, too, trades below book value, with a P/B of just 0.83.
Prospect Financial is a closed end fund that lends to and invests in privately-held, middle market companies. It recently acquired Patriot Capital Funding for $197 million, expanding its portfolio to include a broad array of investments in everything from aerospace hardware to boxer shorts.
New York Community Bancorp (NYSE:NYB) is the holding company for New York Community Bank, a retail operation with 214 offices spread over the metropolitan New York City area. The bank's shares currently yield 8.8% and trade with a P/E of 11.4. Price to book on the shares is a lowly 0.90.
The Bottom Line
Not every outfit in the banking sector succumbed to the lure of outsized profits with outsized risks. The above named companies are an excellent example of financial firms that took to heart the old-school banker's lessons on prudence. The financials are healthy - if you know where to look. (To learn more, see Analyzing A Bank's Financial Statements.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
