10 Cheap Financial Stocks With Strong Top Line Growth Despite A Weak Global Economy

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 |  Includes: AGO, ARCC, BK, BPOP, COWN, IRE, KKR, MS, NYCB, UBS
by: Follow My Alpha

In today's world with social movements such as Occupy Wall Street the financial services sector is still the all American pariah. Further, there is still quite a debate on whether financial services have any opportunity to offer moving forward. While the financial services sector may remain weak, not all companies were built equally. Today we found more than a few financial services companies that that are still worth reviewing due to their strong top line growth in a tough global economy and with their low price-multiple valuations.

The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that may be potentially undervalued or overvalued. If a company has a Price/Book Value Ratio of less than 1, it is stated to be “trading below “break up” value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.

The 1-Year Fiscal Revenue Growth Rate represents a company’s growth over an extended period of time. This is one of many great metrics to use when trying to identify which firms are navigating the global economic landscape and to see which firms generating positive, negative, or neutral growth trends.

We first looked for undervalued financial stocks (P/BV<1). From this narrowed list of candidates we then looked for companies that have illustrated strong top line growth over the last year (1-year fiscal revenue growth rate>10%).

The list is ranked from highest to lowest by the 1-year fiscal revenue growth rate:

1. KKR Financial Corporation. (KFN)

Sector

Financial Services

Industry

Asset Management

Market Cap

$1,414M

Beta

3.01

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The company operates as a specialty finance company with expertise in a range of asset classes. KFN has a P/BV ratio of 0.80 & a 1-year fiscal revenue growth rate of 162.92%. The short interest was 4.20% as of 10/14/2011.

2. Ares Capital Corporation. (ARCC)

Sector

Financial Services

Industry

Asset Management

Market Cap

$3,052M

Beta

2.02

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The company specializes in acquisition, recapitalization, mezzanine debt, restructurings, and more. ARCC has a P/BV ratio of 0.97 & a 1-year fiscal revenue growth rate of 97.09%. The short interest was N/A as of 10/14/2011.

3. Cowen Group, Inc. (COWN)

Sector

Financial Services

Industry

Capital Markets

Market Cap

$312M

Beta

1.24

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The company provides alternative investment management, investment banking, research, and sales and trading services for its clients. The company has a P/BV ratio of 0.49 & a 1-year fiscal revenue growth rate of 88.71%. The short interest was 17.30% as of 10/14/2011

4. Bank of New York Mellon (BK)

Sector

Financial Services

Industry

Asset Management

Market Cap

$24,925M

Beta

1.05

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The company provides various financial products and services worldwide. BK has a P/BV ratio of 0.74 & a 1-year fiscal revenue growth rate of 81.28%. The short interest was 1.40% as of 10/14/2011.

5. Bank of Ireland (IRE)

Sector

Financial Services

Industry

Banks - Regional - Europe

Market Cap

$852M

Beta

4.77

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The company provides banking and other financial services to small and medium-sized commercial and industrial companies in Ireland and internationally. IRE has a P/BV ratio of 0.08 & a 1-year fiscal revenue growth rate of 46.65%. The short interest was N/A as of 10/14/2011.

6. Assured Guaranty Ltd. (AGO)

Sector

Financial Services

Industry

Insurance - Specialty

Market Cap

$2,159M

Beta

2.78

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The company provides credit enhancement products to the public finance, structured finance, and mortgage markets in the United States and internationally. AGO has a P/BV ratio of 0.55 & a 1-year fiscal revenue growth rate of 43.21%. The short interest was N/A as of 10/14/2011.

7. New York Community Bancorp (NYB)

Sector

Financial Services

Industry

Specialty Finance

Market Cap

$5,533M

Beta

0.84

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The company operates as a multi-bank holding company for New York Community Bank and New York Commercial Bank, which offer banking products and services in New York, New Jersey, Ohio, Florida, and Arizona. It primarily engages in generating deposits and originating loans. NYB has a P/BV ratio of 1.00 & a 1-year fiscal revenue growth rate of 42.80%. The short interest was 4.40% as of 10/14/2011.

8. Morgan Stanley. (MS)

Sector

Financial Services

Industry

Capital Markets

Market Cap

$31,290M

Beta

1.10

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The company provides various financial products and services to corporations, governments, financial institutions, and individuals worldwide. MS has a P/BV ratio of 0.54 & a 1-year fiscal revenue growth rate of 34.94%. The short interest was 1.80% as of 10/14/2011.

9. UBS AG. (UBS)

Sector

Financial Services

Industry

Banks - Global

Market Cap

$46,253M

Beta

1.75

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UBS is a global financial company serving a discerning global client base. It provides private banking services and is a global asset manager. The company has a P/BV ratio of 0.79 & a 1-year fiscal revenue growth rate of 31.22%. The short interest was N/Aas of 10/14/2011.

10. Popular Inc. (BPOP)

Sector

Financial Services

Industry

Banks - Regional - US

Market Cap

$1,762M

Beta

2.38

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The company provides a range of retail and commercial banking products and services primarily to corporate clients, small and middle size businesses, and retail clients in Puerto Rico and Mainland United States. BPOP has a P/BV ratio of 0.45 & a 1-year fiscal revenue growth rate of 29.30%. The short interest was 0.70% as of 10/14/2011.

We hope this list helps as investors do their own due diligence and research on financial services company.

*Company profiles were sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.