Credit Suisse's Top 10 Financial Stocks: Schwab Out, Goldman In

The Financial sector has lagged the overall market in 2015, and the Financial Select Sector SPDR ETF XLF has gained 0.2 percent versus the S&P 500’s 1.5 percent gain year-to-date. For the first time in two months, Credit Suisse analysts have updated their top Financial stock picks in 10 different subsectors, and the firm has made five change to its top picks from October.
 

Here’s a full list of the names they chose.

1. Asset Managers: Affiliated Managers Group Inc AMG
Analyst Craig Siegenthaler like the company’s “robust” deal pipeline and expects that buybacks will continue to support share price.

2. Large-Cap Banks: JPMorgan Chase & Co JPM
Analyst Susan Katzke says that JP Morgan has “proven the value of a scaled, integrated financial services entity.”

3. Mid-Cap Banks: BB&T Corporation BBT
Analyst Jill Shea sees continuing fundamental outperformance from BB&T and praises the company’s “willingness to optimize its balance sheet and capital deployment.” This month, BB&T has replaced KeyCorp KEY as a top pick.

4. Brokers, Exchanges & Alternative Asset Managers: Goldman Sachs Group Inc GS
Analyst Christian Bolu likes Goldman’s solid balance sheet and vies the company as “a best-in-class brokerage franchise with solid market positioning across a myriad of client businesses.” Goldman has replaced Charles Schwab Corp SCHW as the top pick in the space.
 

5. Insurance-FG & Life: MetLife Inc MET
Analyst Tom Gallagher believes the stock is currently undervalued “given improved visibility on capital returns and continuation of organic growth in international markets.”

6. Insurance-P&C: ACE Limited ACE
Analyst Ryan Tunis believes the buyout of Chubb Corp CB was “an aggressive, strategically sound and consistent move” and likes ACE’s recent push into key U.S. markets. ACE replaced Allstate Corp ALL as the top pick in the space.
 

7. Mortgage REITs: Nationstar Mortgage Holdings Inc NSM
Analyst Doug Harter sees an “attractive valuation” for Nationstar and believes that the sale of a minority stake in Xome could serve as a catalyst for the REIT. Nationstar has replaced PennyMac Mortgage Investment Trust PMT as the new top pick in the space.

8. REITs: Taubman Centers, Inc. TCO
Analyst Ian Weissman argues that “the valuation is compelling” and points out that the REIT is currently trading at a 29 percent discount to NAV. Taubman replaces Simon Property Group Inc SPG as the top pick in the space.
 

9. Specialty Finance: Discover Financial Services DFS
Analyst Moshe Orenbuch sees the company as “the best combination of strong operating fundamentals and valuation among the large card issuers.”

10. Trust Banks, M&A Advisors & Market Technology: Investment Technology Group Inc ITG
Analyst Ashley Serrao believes that “the firm is cyclically well-positioned to succeed in Europe” and believes that the impact of the SEC settlement will be temporary.

Disclosure: the author holds no position in the stocks mentioned.