Cheap Financials With Outstanding Fundamentals

After a tremendous run-up in stocks in general, and an extraordinary rise in the financial shares in particular, one would guess there would be nothing left to choose from among the banks. But that would be erroneous. There are, in fact, a bevy of companies in the sector that still boast outstanding fundamentals and that every value investor worth his scratch should consider. Not all bankers are lawless brigands, and not all brokers and insurance dealers are hucksters. (Read our related article, What Are Fundamentals?, and learn what this term the investing world loves to talk about really means.)

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Here are five names whose numbers belie their very conservative business models - and responsible management.

New York Community Bancorp, Inc. (NYSE:NYB)
This company operates 212 retail and commercial banking outlets across New York and New Jersey. The bank's shares currently pay an annual dividend of 8.74% and trade with a price/earnings ratio of 11.43. Price to book is just 0.94. NYB shares are up more than 50% since its 52-week low in March, to nearly $11.50 and were just upgraded to "buy" by Standpoint Research, which expects the stock to close between $14 and $16 within a year.

Local Retail Operations with Rock-Solid Fundamentals
OceanFirst Financial Corp., Inc. (NASDAQ:OCFC) is another retail north-eastern based banking operation, with headquarters in New Jersey. The company pays shareholders 7.84% annually to hold the shares, which trade with a trailing one-year multiple of 8.55 times last year's earnings. The stock is up over 30% since March and trades slightly below the breakup value of the company, with a P/B of 0.98.

United Bankshares, Inc. (NASDAQ:UBSI) raised its annual dividend last week for the 36^th consecutive year. The company, which operates a retail banking service in West Virginia, now pays investors 7.11% annually and trades with a P/E of 11.06.

Closed-End Funds Sporting Great Numbers
Prospect Capital Corporation (NASDAQ:PSEC) is a closed-end investment fund that invests in mid-sized, private companies through both debt and equity financings. PSEC shares currently offer an outsized 15.13% annual dividend and carry a P/E of 18.46. The shares are up nearly 70% since March and trade with a P/B of 0.98.

PennantPark Investment Corporation (NASDAQ: PNNT) is another closed-end fund that trades below book, with a P/B of 0.72. The shares yield an annual 12.12% and carry a P/E of a mere 4.87. PNNT stock is up almost 200% since its 52-week low.

The Wrap
Financials have been both scapegoat and darling this year, and where the sector is headed in the future will depend in large part on how investors relate to the biggest names in the industry. But for value investors willing to sift a little and search under the radar, there are a number of companies in the field worthy of a serious look.

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