In this article, we will look at the 12 Undervalued Financial Stocks to Buy Now.
Financial stocks are getting more attention as investors look for cheaper parts of the market that still have earnings support. The sector has not moved in one straight line, with concerns around credit, rates, and economic growth still weighing on sentiment. Still, that uneven backdrop is also why banks, asset managers, insurers, and capital markets firms can become interesting when valuations look disconnected from growth prospects.
Fidelity says it is finding “attractive opportunities in undervalued financial stocks poised for growth,” especially names that may be “potentially undervalued relative to their growth potential.” The financials trade still needs stock selection. T. Rowe Price makes the banking case more directly, saying the sector presents “compelling opportunities for value investors,” with banks emerging as “a promising mid double-digit return industry” supported by “significant earnings growth.” J.P. Morgan Asset Management adds that “Value stocks have outperformed Growth year-to-date in 2026,” and points to “capital markets activity, benefiting financials.” In summary, the setup is less about buying every bank and more about finding financial companies where valuation, earnings recovery, and capital return are lining up.
Against this backdrop, undervalued financial stocks deserve a closer look. With that in mind, let’s take a look at the 12 Undervalued Financial Stocks to Buy Now.
Our Methodology
We used the Finviz screener to identify financial stocks trading below a forward P/E of 15x that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
12. Royal Bank of Canada (NYSE:RY)
On May 19, 2026, BofA analyst Ebrahim Poonawala raised the firm’s price target on Royal Bank of Canada (NYSE:RY) to C$273 from C$271 previously and maintained a Buy rating on the shares.
Scotiabank analyst Mike Rizvanovic also raised the firm’s price target on Royal Bank of Canada (NYSE:RY) to C$252 from C$247 previously and maintained an Outperform rating on the shares.
Meanwhile, on May 12, 2026, Raymond James has downgraded Royal Bank of Canada (NYSE:RY) to Market Perform from Outperform with a price target of C$265.50, up from C$248, ahead of Q2 earnings for the Big 6 Canadian banks. Raymond James said it continues to view RBC as “a scaled, diversified franchise with a lower-volatility earnings profile,” but noted that those same attributes may limit relative upside in a stronger trading revenue environment. The firm added that RBC’s greater exposure to rates and credit trading may benefit it less than its peers.
Royal Bank of Canada (NYSE:RY) operates as a diversified financial service company worldwide.
11. The Toronto-Dominion Bank (NYSE:TD)
On May 19, 2026, BofA raised the firm’s price target on The Toronto-Dominion Bank (NYSE:TD) to C$168 from C$150 previously and maintained a Buy rating on the shares.
On May 12, 2026, Raymond James analyst Stephen Boland upgraded The Toronto-Dominion Bank (NYSE:TD) to Outperform from Market Perform with a price target of C$152.50, up from C$141, ahead of Q2 earnings for the Big 6 Canadian banks. Boland said TD is “reasonably valued” and cited increased confidence in management’s ability to execute on its strategic priorities, supported by a recent meeting with TD Group President and CEO Raymond Chun.
Earlier in May, Scotiabank upgraded The Toronto-Dominion Bank (NYSE:TD) to Outperform from Sector Perform with a price target of C$150, up from C$142. Scotiabank said it is putting “increasing weight on the cost side of the P&L” given potential medium-term revenue headwinds for the group, particularly around net interest income. The firm also said its branch proximity analysis shows TD has the most branch count moderation potential among peers.
The Toronto-Dominion Bank (NYSE:TD) provides financial products and services in Canada, the United States, and internationally.
