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Jim Cramer said on Monday night that he wasn’t going to recommend financials. He even went so far to advise viewers of his Mad Money show to sell their financials “just because [he doesn’t] like the financials.” Well, Mr. Cramer that just leaves more for everyone else. Financials may not be perceived as a great sector right now – they are risky and they have lost money but the upside is tremendous. The markets made a mistake when they valued every dotcom stock as potential winners. They are making a mistake right now by valuing every financial stock as a loser. Yes, we think mega-cap financial stocks like Bank of America (NYSE:BAC), Citigroup (NYSE:C), JP Morgan (NYSE:JPM), Wells Fargo (NYSE:WFC), and Capital One (NYSE:COF) are undervalued as a group. We expect a well-diversified portfolio of financials to outperform the market over the next 12-24 months.

We also think foreign financial stocks are also undervalued. Here is a list of four undervalued foreign financial stocks that are priced low enough to be worth the risk:

Mizuho Financial Group (NYSE:MFG) provides banking services to customers throughout Japan and beyond. It offers retail banking, like home loans, credit cards and deposits, and well as corporate banking services. As of the close of trading on Tuesday, December 13, MFG was trading at $2.60 a share, or 14.69 times its earnings, with a one-year target estimate of $3.47. In addition to the potential upside, MFG pays a 27 cents dividend (10.20% dividend yield). This is a straight forward pick – we like the upside and the high dividend. You also have to look at the market it deals in primarily, Within Japan, MFG is one of the largest banks and Japan is still recovering from its recent tragedy. As the country recovers, so will the banks. Jim Simons’ Renaissance Technologies seems to agree. It had almost $2 million in the company at the end of the second quarter.

Sumitomo Mitsui Financial Group (NYSE:SMFG) is also a bank in Japan and is just as prominent, only SMFG has operations in Japan as well as the Americas, Europe, Middle East, Asia and Oceania. SMFG closed trading on December 13 at $5.65 a share with a one-year estimate of $8.16. It also offers a 24 cents dividend, that’s a dividend yield of 4.10%. Right now, SMFG is trading at just 1.66 times its earnings. Its total revenue increased by over 15% from its fiscal year 2010 to fiscal year 2011. While much of that extra was eaten up by non-recurring expenses, if the company stays on track, that revenue will be there next year – minus the non-recurring expenses. Jim Simons owned a stake in SMFG at the end of the second quarter, as did David Dreman’s Dreman Value Management.

ING Groep NV (NYSE:ING) is a financial services company. Specifically, it provides banking, asset management, life insurance and retirement services worldwide. As of the end of trading on December 13, ING was trading at $6.81 a share, or 5.86 times its earnings. Analysts have given the company a one-year target estimate of $13.50. Analysts are also bullish about ING’s earnings growth, estimating a 19.00% growth per annum over the next five years, compared to forecasts of 9.82% for its industry and 9.95% for its sector. David Dreman is also a fan of ING. He had $3.7 million in the company at the end of the second quarter.

Banco Santander (STD) is a company that provides banking services. Most of its clients are in Spanish-speaking areas like Spain, Latin America and South America, but STD also has operations in continental Europe, the UK and the U.S. STD closed trading on December 13 at $7.23 a share, or 6.52 times its earnings. It has a one-year target estimate of $9.52 a share and pays a 61 cents dividend (7.80% dividend yield). Analysts predict STD’s earnings will grow by 12.10% over the next five years, beating out its industry’s forecast of 9.15% and its sector’s forecast of 9.95%. Ken Fisher’s Fisher Asset Management had over $334 million in the company at the end of the second quarter. David Dreman also owned a stake in STD at the end of June.

Disclosure: I am long C.

Source: 4 Analyst 'Buys' In The Financial Sector Trading Under $8