2 Financial Services Bargains After the Sell-Off

The firm is not trying to declare a formal bottom by any means. Still, these picks are viewed as attractive. Several driving forces are at work here. First is that the sell-off should not have caught investors totally off-guard, based on leadership and low participation this summer.

Argus noted that a key feature that distinguished this market meltdown was an absence of severe economic strains in the U.S. economy, as well as a lack of signs of collapse in major overseas economies. The reality is that the markets already knew about China’s malaise, woes in the European Union and Greece, weak oil capital GDP and earnings growth risks, and a likely rate hike. Argus even noted that the economy is not currently at the same risk today as in 2000 and 2008 — and not even in 2011.

Argus believes its stock ideas have generally limited exposure to China and emerging markets. Two of them have an average of 25% upside, if the firm is correct in its views.

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BB&T Corp. (NYSE: BBT) is rated as Buy, with a $46.00 price target. Its shares are down about 10% since the close of trading on August 19. If the firm is right, BB&T has about 29% potential upside to the firm’s target. The firm likes BB&T because it is a regional bank with mid-single-digit loan growth. It also has strong credit quality. Another boost is that BB&T could benefit from higher short-term interest rates on top of its fee-based income and income from an insurance unit.

BB&T shares were last seen up 2% at $36.28 in late morning trading on Tuesday. The Argus $46.00 price target is more than $2.00 higher than the consensus analyst target price of $43.82, and the stock has a 52-week range of $34.50 to $41.90.

Visa Inc. (NYSE: V) was also rated as Buy and has roughly 21% potential upside to its $83.00 price target. Argus showed that Visa shares were down 8% since the August 19 close. The firm expects Visa to be a winner as the global card spending momentum should remain, with low double-digit growth in its payments volume. A rising use of credit cards, as well as the rewards programs and higher merchant acceptance act as further drivers. Argus also said that Visa is insulated from interest rate changes and credit quality concerns, and the potential combination with Visa Europe is also a long-term positive.

Visa shares were last seen up 2.6% at $70.14. The Argus target price of $83 is just above the consensus analyst price target of $82.13, and it is against a 52-week trading range of $48.80 to $76.92.

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