It's a wonder what a falling market can do. For one, it brings into clearer focus which sectors are weakest. Those that suffer the greatest losses when the market is trending downward, of course, possess the least investor confidence. But it can also turn up some great value plays. Often within those same losing sectors there are stocks that get dragged through the maelstrom that have no fundamental operating issues worth worrying about. In fact, it's often the case that companies turn up on the radar that are bucking the trend outright - operating very profitable businesses in the face of a sliding market.

So it is now with the financials after news that a number of large American lenders may not have followed proper foreclosure protocol with clients. The selloff in the financials has been bad enough. But there are also gems emerging in that sector that are worth a spot in your portfolio. Take a gander at three of them below, and consider possible entry points in the days and weeks to come.

IN PICTURES: 20 Lazy Ways To Save Money

Canadian Insurance
Manulife Financial (NYSE:MFC) is a Canadian insurer with operations spanning 22 countries around the world. The company's shares now trade with a dividend yield of 4.24% and a price/earnings ratio of 7.82. Manulife shares have not had a good 2010. Though the shares have stabilized over the last couple of months, year-to-date they're down over 30%. That's a lot worse than the Financial Select Sector SPDR ETF (NYSE:XLF), a proxy for the broader financial sector, that is up a fraction of a percent on the year.

MFC also sports some deeply undervalued price to book and price to sales numbers, the former coming in at just 0.85 and the latter at 0.53. That could be why 55% of the company's float is held by institutional investors. (To learn more, see Using The Price-To-Book Ratio To Evaluate Companies.)

In late September, Fitch Ratings assigned an A- grade to Manulife's most recent bond offering and affirmed the company's outlook as stable.

Buyout Surge
Shares of The Student Loan Corporation (NYSE:STU) have also struggled since New Year's, losing 36%, but are up convincingly in the last month. News of the firm's impending takeover by Discover Financial Services (NYSE:DFS) caused the stock to surge by as much as 50%.

STU shares trade with a P/E of 5.2 and a dividend yield of 4.7. The company provides loans for students in need of financing post-secondary education.

Maximum Return
Source Capital, Inc. (NYSE:SOR) is a closed end fund that invests in equities to achieve a maximum total return. The stock currently yields 5% and trades with a P/E of 5.5. Year-to-date the shares are up nearly 11%.

Bottom Line
The financials may be down as a group recently, but there are some decent looking companies on offer as a result.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  2. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  3. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  4. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  5. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  6. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  7. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  8. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  9. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  10. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center