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Stock Strategist

A Guide to Today's Financial Stock Bargains

U.S. bank stocks are on sale--and investors should jump aboard.

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Investing in the domestic financial services sector might sound daunting, especially in light of the recent volatility in this area of the market. Moreover, the sector is vast and diverse. A legitimate question is, how can an investor pick winners without stumbling on the losers--especially at a time when there have been so many of the latter?

My colleagues and I cover banks from more than 15 countries, and we can confirm that the U.S. financials sector is one of a kind. The range of choices for investors is truly unmatched in any other market, and one could spend an entire career investing solely in this large basket of stocks. Recently, these choices have been growing exponentially, thanks to the mortgage turmoil that has sent many investors running for the hills. My colleagues at Morningstar have published several articles over the past few months explaining recent events and highlighting our top picks. I'd like to step back and provide a brief sector overview for investors who are new to this market or viewing it with interest from afar, examining the various segments contained under the wide financials umbrella. In the process, I will also offer a few investment ideas culled from our most recent analyses of undervalued stocks.

Michael Kon has a position in the following securities mentioned above: BAC, BBX, CSE. Find out about Morningstar’s editorial policies.