A rising rate environment and favorable macroeconomic factors in the first half of 2017 is the reason for continued momentum in the sector. Higher rates help finance companies (except REITs) in generating better revenues. Moreover, the strengthening of the global economy stepped up activities in the Finance sector that in turn gave its performance a boost.
The expected continuation of benefits from rising interest rates and reforms proposed by the Trump administration should keep the momentum alive for finance stocks.
While a total regulatory change is unlikely without considerable political opposition, minor adjustments that the Trump management could make through alternate routes would help the financial companies to lower their fixed costs. However, only time will tell if these companies will get any support from the reforms.
A Look at Fundamentals
The Finance sector does not have an impressive earnings growth history. However, the long-term earnings per share growth is projected at 13.2% versus 9.6% for the S&P 500.
However, it’s hard to find value in this space, as stocks with solid future prospects have already appreciated significantly. But, as the momentum is likely to continue for some time, it’s a good idea to pick a few stocks that may not lose their momentum soon.
4 Stocks to Buy Now
Here we suggest four stocks that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Momentum Score of A.
Our research shows that stocks with this combination offer the best upside potential.
(You can see the complete list of today’s Zacks #1 Rank stocks here.)
Health Insurance Innovations, Inc. (HIIQ - Free Report) : The stock has gained nearly 447.3% over the past 12 months. The Zacks Consensus Estimate for the current year has been revised 6.9% upward over the last 60 days. This Life-Insurance Company has a Zacks Rank of 1.
AeroCentury Corp. (ACY - Free Report) : Shares of AeroCentury have gained 48.8% in a year. This leasing company has a Zacks Rank of 1. Further, its Zacks Consensus Estimate for current-year earnings has been revised 10% upward over the last 60 days.
HopFed Bancorp, Inc. (HFBC - Free Report) : Shares of HopFed have gained 24.4% in a year’s time. This saving and loan company has a Zacks Rank of 2. The Zacks Consensus Estimate for the current year has been revised 16.7% upward over the last 60 days.
America First Multifamily Investors, L.P. (ATAX - Free Report) : In the last 12 months, this company’s shares have gained nearly 1%. It has a Zacks Rank of 2. The Zacks Consensus Estimate for the current year has been revised 16.7% upward over the last 60 days.
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