10 Oversold, Undervalued Financial Stocks With Rebound Potential

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 |  Includes: BAC, BCS, BFR, COWN, KB, MTU, PHH, RBS, RF, SNV
by: Follow My Alpha

Financial stocks may look bleak but that doesn’t mean there might not be opportunity out there for the opportunistic and patient investor. So how does any investor spot a potential diamond in the rough in the trash bin you ask? We like to start by reviewing a company’s P/CFO ratio when starting off on a treasure hunt that involves digging through junk.

The P/CFO ratio measures the market’s expectations of a company’s future financial health and cash flow from operations based off its current operations. A key advantage with this ratio is that it removes non-cash factors and depreciation, which helps provide a clear picture of how much cash a company is actually bringing in relative to the stock price.

We ran a screen for financial companies that have underperformed the S&P 500 over the last month. From this narrowed pool we then screened for companies that appeared cheap relative to their P/CFO ratio (X<10).

The list is ranked from lowest to highest by the P/CFO ratio:

1. Royal Bank of Scotland Group (NYSE:RBS)

Sector

Financial Services

Industry

Banks - Global

Market Cap

$19905 million

Beta

2.79

Analyst Sentiment

N/A

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The company offers banking and financial services to personal, commercial, corporate, and institutional customers in the UK, US, and beyond. The company’s P/CFO ratio is 0.58. RBS’s 1-month return is -36.59%. The short interest for the company is N/A as of 8/15/2011.

2. PHH Corporation (NYSE:PHH)

Sector

Financial Services

Industry

Credit Services

Market Cap

$1009 million

Beta

1.63

Analyst Sentiment

3/3-List Buy/Outperform (Bullish)

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The company offers a mortgage and fleet management outsourcing services in North America. The company’s P/CFO ratio is 0.64. PHH’s 1-month return is -6.67%. The short interest for the company is 14% as of 8/15/2011.

3. Barclays PLC (NYSE:BCS)

Sector

Financial Services

Industry

Banks - Global

Market Cap

$30138 million

Beta

2.8

Analyst Sentiment

N/A

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The company provides various financial products and services all over the world. The company’s P/CFO ratio is 0.72. BCS’s 1-month return is -28.69%. The short interest for the company is N/A as of 8/15/2011.

4. Bank of America Corporation (NYSE:BAC)

Sector

Financial Services

Industry

Banks - Regional - US

Market Cap

$70636 million

Beta

2.45

Analyst Sentiment

17/34-List Hold/Neutral (Neutral)

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The company offers banking and non-banking financial services to a variety of clients in the US and abroad. The company’s P/CFO ratio is 0.74. BAC’s 1-month return is -27.17%. The short interest for the company is 1.3% as of 8/15/2011.

5. Regions Financial Corporation (NYSE:RF)

Sector

Financial Services

Industry

Banks - Regional - US

Market Cap

4859 million

Beta

1.15

Analyst Sentiment

19/25-List Hold/Neutral (Neutral)

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The company offers retail, commercial and mortgage banking services in the US. The company’s P/CFO ratio is 1.14. RF’s 1-month return is -34.58%. The short interest for the company is 3% as of 8/15/2011.

6. Mitsubishi UFJ Financial Group (NYSE:MTU)

Sector

Financial Services

Industry

Banks - Global

Market Cap$

64066 million

Beta

0.93

Analyst Sentiment

12/14-List Buy/Outperform (Bullish)

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The company offers various financial services to a variety of clients in Japan and internationally. The company’s P/CFO ratio is 1.15. MTU’s 1-month return is -6.4%. The short interest for the company is N/A as of 8/15/2011.

7. KB Financial Group Inc (NYSE:KB)

Sector

Financial Services

Industry

Banks - Regional - Asia

Market Cap

$13346 million

Beta

2.16

Analyst Sentiment

26/27-List Buy/Outperform (Bullish)

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The company is a holding company for Kookmin Bank, which offers financial products and services in Korea. The company’s P/CFO ratio is 1.39. KB’s 1-month return is -22.93%. The short interest for the company is N/A as of 8/15/2011.

8. Bbva Banco Frances,S.A. (NYSE:BFR)

Sector

Financial Services

Industry

Banks - Regional - Latin America

Market Cap

$1380 million

Beta

1.63

Analyst Sentiment

4/5-List Hold/Neutral (Neutral)

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The company offers financial services to corporate and retail clients in Argentina. The company’s P/CFO ratio is 1.41. BFR’s 1-month return is -20.33%. The short interest for the company is N/A as of 8/15/2011.

9. Synovus Financial Corp (NYSE:SNV)

Sector

Financial Services

Industry

Banks - Regional - US

Market Cap

$1068 million

Beta

0.99

Analyst Sentiment

21/29-List Hold/Neutral (Neutral)

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The company offers diversified financial services in the south east US. The company’s P/CFO ratio is 1.41. SNV’s 1-month return is -31.82%. The short interest for the company is 8% as of 8/15/2011.

10. Cowen Group, Inc. (NASDAQ:COWN)

Sector

Financial Services

Industry

Capital Markets

Market Cap

378 million

Beta

1.12

Analyst Sentiment

1/2-List Hold/Neutral (Neutral)

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The company is an asset management holding company. The company’s P/CFO ratio is 1.42. SNV’s 1-month return is -17.72%. The short interest for the company is 18.8% as of 8/15/2011.

We hope this list helps investors as they do their own due diligence on financial stocks that appear undervalued.

Disclosure: I am long BCS.