The sector, as a whole, appears to be on the rise. Since December, a combination of easing of concerns about Europe, strong earnings reports, and successful stress tests have helped the sector rebound from its previously moribund state. Since November 24 of last year, the Financial Select Sector SPDR (XLF), an ETF that tracks the financial sector, has gained over 30 percent, showing the sector as a whole has been on the rise.
Given the potential that the financial sector is rebounding, some investors may be seeking out cheap options to invest in the financial sector. While many will simply cull over the well known investment banks and hedge funds, there are also several small cap financial stocks that offer attractive valuations. The following stocks have P/E ratios under 15, meaning that they’re coming at a cheap price based on their earnings, as well as showing at least a 15 percent jump in share price over the last six months. What’s more, these stocks tend to be a favorite among those analysts reviewing them.
Holliday Fenoglio Fowler, Inc. (HF)
Market Cap: $607.48 million P/E Ratio: 14.98 Performance Last Six Months: 40.46 percent
HFF is a real estate company providing capital markets and commercial real estate services in the United States. Headquartered in Pittsburgh, PA, the company has been through multiple different incarnations since initially being founded as Fowler, Goedecke & Co. in Boston in 1974. Despite the price performance over the last six months, HFF still boasts a PEG of 1.00 and a Forward P/E of 11.53.
Hanmi Financial Corp (HAFC)
Market Cap: $336.30 million P/E Ratio: 9.71 Performance Last Six Months: 29.61 percent
Hanmi Financial is a regional bank that provides general commercial banking primarily to the Korean-American population, as well as other multi-ethnic communities, in several California markets including Los Angeles , San Diego, San Francisco, San Bernadino, Orange County, Santa Clara, and Silicon Valley. Based out of Los Angeles, the bank not only offers an attractive price for its earnings, its profit margin of over 20 percent could be attractive to many investors.
State Bank Financial Corporation (STBZ)
Market Cap: $571.93 million P/E Ratio: 13.66 Performance Last Six Months: 20.28 percent
State Bank Financial Corporation is an Atlanta, GA-based regional bank. The company was proclaimed the best performing community bank in the United States by SNL Financial’s annual list of the top performing regional bankswith between $500 million and $5 billion in assets. SNL Financial, which compiles the list based on six core financial performance metrics, declared State Bank Financial the cream of the crop for 2011. The company could also offer investors an attractive buy considering its relatively low P/E and P/FCF of just 3.69.
W. P. Carey & Co. (WPC)
Market Cap: $1.88 billion P/E Ratio: 13.65 Performance Last Six Months: 16.49 percent
Between a global investment portfolio and acting as a provider of built-to-suit transactions, and long-term sales leaseback services, W.P. Carey & Co. offers a number of attractive numbers to the potential investor. The company’s P/E ratio is one thing, but its gross margin of 94.91 percent, operating margin of 34.15 percent, and profit margin of 42.03 percent are all signs that the company is very profitable. What’s more, the financial company’s dividend yield of 4.78 percent is more than healthy.