Financial Stocks to Profit From the Debt Ceiling Increase

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 |  Includes: COF, FHN, MBI, PBCT, PGR
by: Stookle

The stock markets have been turbulent over the last few weeks. The political grid lock on the debt ceiling increase was the primary catalyst for a 4% loss in S&P 500 over the last week. Even though a bill is not passed to date, there is a very high probability for the increase of the debt ceiling next week. Markets are anticipated to rally 2 to 4% after the bill is passed. Below are the securities that are detected by Stookle algorithms that not only had a price decline over the last two weeks but also had a corresponding volume decline during the time period. These financial stocks are anticipated to outperform the market.

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First Horizon National Corp (NYSE:FHN): First Horizon National Corporation provides various financial services in the United States and internationally. The company primarily offers general banking services for consumers, businesses, financial institutions and governments. FHN is trading at 11.83 times forward earnings and is currently trading below its book value of $9.14. FHN is improving its cash flows after the 2008 meltdown in the financial markets. The company lost 6.35% in the last two weeks and is poised for turn around.

MBIA Inc (NYSE:MBI): MBIA Inc. provides financial guarantee insurance and related reinsurance, advisory and portfolio services, as well as investment management services to public finance and structured finance markets. MBI is trading at 30% lower volume levels over the last few weeks and the stock lost 9.8% during this time frame. MBI is trading at 6.67 time’s future earnings and a little higher than its book value of $8.81. Recent FHFA’s actions are favorable for MBI and can be a catalyst for turnaround going forward. MBI is currently trading at $9.20.

Peoples United Financial Inc. (NASDAQ:PBCT): Peoples United Financial, Inc. operates as the bank holding company for Peoples United Bank that provides commercial banking, retail and business banking and wealth management services to individual, corporate and municipal customers. PBCT has consistently increased its dividend payout over the last decade. PBCT is trading 15% below its lowest price target set by analyst and the company is anticipated to grow at 12.5% for the next 5 years. PBCT has a firm support around $12.30. The downside potential is limited and there is a strong upside potential in the next few weeks. PBCT is currently trading at $12.68.

Capital One Financial (NYSE:COF): Capital One Financial Corporation is a diversified financial services holding company. The Company offers a range of financial products and services to consumers, small businesses and commercial clients through branches, the Internet and other distribution channels. COF is using its capital for the acquisition of low risk high growth business of ING direct. COF’s acquisition of ING Direct is a win-win scenario; the deal is expected to reduce the risk on the liabilities. COF is currently trading at 7.99 times the future earnings and has a ROE of 12.96 with a book value of $62.92. COF has a PEG of 0.82.

Progressive Corp (NYSE:PGR): The Progressive Corporation, through its subsidiaries, provides personal and commercial automobile insurance and other specialty property-casualty insurance products and related services. PGR is trading at 11.45 times forward earnings and has an attractive ROE of 18.12%. The company has a decent increase in revenues and profits in the last two years and is expected to grow over 7% for the next 5 years. PGR has a decent dividend yield of 2%.

Disclosure: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours. Website disclaimer Algorithm Cabinet LLC and/or STOOKLE, is not a registered investment advisor and does not provide investment advice. The information contained in this website/blog is for general information purposes only.