BMO - The 3 Most Undervalued Financial Services Stocks to Buy Now: August 2023

2023-08-15 05:20:02 ET

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There are many options to invest in the financial sector of the capital markets. It can be quite difficult and cumbersome to look for the best investment opportunities within such a large sector. But, if you are really interested in it, here are three of the best undervalued financial services stocks. It is worth taking a look at them, studying them in detail and considering them as buying options for August.

It is no secret that money likes growth, and all of these stocks carry significant upside coming from consensus analyst targets. The favorable ratings come as projections and management expectations pave the way for investors to enjoy the new bull runs coming to these undervalued financial services stocks.

Avantax (AVTA)

Navigating the world of finance can sometimes seem like a daunting task. Imagine having a group of financial experts by your side, guiding you through the complexities of money management and planning. That’s what Avantax (NASDAQ: AVTA ) offers, a financial team that’s akin to having a smart friend who excels in tax and personal finance matters.

In recent times, they have demonstrated their prowess by achieving remarkable financial results. During Q2 2023 they broke their own records, earning a profit of nearly $187 million. This was an increase of 15% compared to the previous year.

But that’s not all. They are gaining the trust of more and more people who entrust them with their savings. An impressive sum of almost $390 million earned in just three months. And here’s the kicker, they also expertly manage a huge portfolio of client money, exceeding $83 billion. Half of this amount is diligently dedicated to helping people with their investment decisions, setting a new benchmark for excellence.

Avantax not only knows how to manage other people’s money, but also its own finances. With a cash reserve in excess of $100 million, they have been able to take advantage of interest rates to grow their money and keep it safe.

Bank of Montreal (BMO)

Now let’s turn our attention to Bank of Montreal (NYSE: BMO ), a financial institution that resembles a safe haven for both individuals and businesses. With an unblemished reputation in the financial arena, they act as a trusted advisor helping people make sound financial decisions.

Let’s take a look at their Q2 2023 financials . Net income was $1 billion, a notable contrast to $4.7 billion a year earlier. However, its adjusted net income showed greater consistency, hovering around $2.2 billion versus $2.1 billion.

Beyond the financial results, BMO’s commitment to corporate responsibility and sustainability shines through. It has been recognized as one of Canada’s 50 Best Corporate Citizens for 22 consecutive years, courtesy of Corporate Knights . This dedication is underscored by its innovative Sustainability Focus Deposit, a financial product that links interest rates to clients’ sustainability achievements.

Qifu Technology (QFIN)

Qifu Technology (NASDAQ: QFIN ) acts as a bridge between financial institutions and consumers in need of credit solutions.

Their financial results just keep growing, as Q1 2023 demonstrates. They managed to connect 150 financial institutional partners with more than 214 million consumers seeking credit, an impressive 11.2% year-over-year (YOY) increase. In addition, credit lines approved for users increased by 15.6% to 46 million. Qifu boasts strong results, with more than 27 million loans granted through its platform in the same period, up 10.8% YOY. During this time, its financial partners originated more than 14 million loans, totaling an impressive 109 billion Chinese yuan (RMB), up 10.7% YOY.

Total outstanding loans grew 16.8% to RMB 171.3 billion. And, a solid delinquency rate of 2.18% over 90 days underscores the good health of its portfolio. Notably, nearly 92% of loans came from repeat borrowers, demonstrating the confidence and satisfaction of its clientele.

As of this writing, Gabriel Osorio-Mazzilli did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .

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