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The Financial sector currently dominates the Zacks #1 Rank list, with 81 stocks, more than double the count of the next closest sector, Computers, which has 32. Analysts have been doling out huge upgrades to companies across the industry thanks to an improving regulatory environment and persistently high interest rates which improve margins.
Excluding energy, which I’ve covered in recent write-ups, and healthcare, the financial sector has been the top performer in the market year-to-date, outpacing the broader market index by over 5%. This relative strength indicates that not only are financial stocks experiencing improving fundamentals, but that fund managers are rotating into the sector.
Below I will be sharing three financial sector stocks, across subindustries that boast top Zacks Ranks, compelling valuations, and strong price momentum. NatWest Group (NWG), OppFi (OPFI) and HCI Group (HCI) represent some of the most exciting opportunities in the market today.
Image Source: Zacks Investment Research
OppFi: High Flying Stock Crushing Earnings Estimates
OppFi is a financial technology company that provides accessible credit products to underserved consumers. The company operates a digital lending platform focused on speed, transparency, and customer service.
The stock has surged 43% year-to-date and currently holds a Zacks Rank #1 (Strong Buy), supported by a strongly upward trending earnings revisions. Notably, OppFi has delivered four straight earnings beats, with surprise percentages ranging from 57% to 100%.
Despite the rally, shares still trade at just 10x forward earnings, suggesting room for further upside if the company continues to outperform expectations.
Image Source: Zacks Investment Research
NatWest Group: Shares Trade at a Discount to Growth
NatWest Group is a major UK-based banking institution offering a wide range of retail and commercial financial services. The company continues to benefit from stable operations and a recovering European banking landscape.
It holds a Zacks Rank #1 (Strong Buy) and ranks in the top 21% of Zacks Industry Rank, reflecting solid analyst sentiment. Shares currently trade at just 8.5x forward earnings, below the industry average of 10.4x and right in line with its 10-year median.
What stands out is NatWest’s PEG ratio of 0.87, based on projected earnings growth of 9.84% annually over the next three to five years—an attractive valuation for a stock with this growth profile.
Image Source: Zacks Investment Research
HCI Group: Stock Staging a Technical Breakout
HCI Group is a property and casualty insurance company with operations in homeowners insurance, real estate, and information technology services. The company is gaining attention for both strong fundamentals and a bullish technical setup.