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JPMorgan Chase & Co. (JPM), Citigroup Inc (C): Three Financial Stocks to Consider

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Financial stocks have been fantastic bets throughout the recovery, but some look to have more room to run than others.

JPMorgan Chase & Co. (NYSE:JPM)

The Select Sector Financial Slct Str SPDR Fd (NYSEARCA:XLF) is up 23% year-to-date. Over the course of the past year, it has outperformed the broader market by a whopping 16 percentage points. Even though the financials have been one of the hottest sectors of the first half of 2013, there is still value to be found. In the coming months, financial equities will continue their uptrend and if investors want to capitalize on this opportunity, they should consider some of the following stocks.

JPMorgan Chase & Co. (NYSE:JPM)

Thomas Lee, JPMorgan Chase & Co. (NYSE:JPM)‘s chief equity strategist, recently hiked his year-end target on the S&P to 1,775 from 1,715 and noted that technology, financials and health care will be the top sector drivers to boost the market. At their current levels, stocks are trading at barely 14 times their forward earnings when they should be closer to 16-17 times.

JPMorgan Chase & Co. (NYSE:JPM) and the Federal Energy Regulatory Commission are nearing the completion of a $410 million agreement that would put to rest accusations that the bank manipulated energy markets in California and the Midwest. The same deal will see JPMorgan Chase & Co. (NYSE:JPM) forgo $200 million in unpaid claims from electricity buyers in California, and will clear up many questions that investors have about the company.

JPMorgan Chase & Co. (NYSE:JPM) also recently announced the possibility of pursuing strategic alternatives for its physical commodities business, including its remaining holdings of commodities assets and its physical trading operations. The decision was a result of intense political and regulatory pressure, but the company will remain fully committed to its traditional financial commodity business.

The company’s commodities business includes trading derivatives and its activities in precious metals. The trading in physical commodities generates less than 2% of
JPMorgan Chase & Co. (NYSE:JPM)‘s total revenue, however.

The company vowed to resolve multiple government investigations and correct problems that regulators have found, and investors should compliment these initiatives to clean up the mess that the company has made.

JPMorgan’s stock is trading almost at 1 times its book value, making it a stock investors should certainly keep an eye on.

AFLAC Incorporated (NYSE:AFL)

AFLAC Incorporated (NYSE:AFL) derives more than 75% of its total revenue from Japan, and volatility in the yen has contributed to some share-price underperformance this year. The supplemental insurance company’s stock is lagging the S&P 500 by about 5 percentage points in 2013, but it’s set to accelerate in the second half.

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