The year 2016 began on an optimistic note for the overall finance sector, as the Fed had raised interest rates in Dec 2015 for the first time in almost a decade. Though the market is yet to see any further action by the Fed on this front, the expectation of further raises on the back of favorable economic factors has been working as a catalyst for the sector since then.

Now the heightened expectations of the next hike in the near term bring this sector into the spotlight, as its constituents – particularly, banks, brokerage firms, asset managers and insurers – typically benefit from a rising rate environment.

The latest comments by some of the Fed officials indicate a high chance of rate hike in the near-term. Even if the Fed's Sep 20-21 meeting doesn’t result in a rate hike, at least one hike is expected by the end of this year. For now, the officials look increasingly divided over the best course.

It is not expected to be an easy call for the Fed, as there is a widespread debate regarding the overall health of the U.S. economy. Nevertheless, the U.S. labor market has shown a decent recovery in the past few months and the inflation level is no longer a major concern.

Finance Sector Price Index

Finance Sector Price Index

Why Growth Stocks?

The market has been witnessing a slew of events and it is not easy to fetch attractive returns solely with the help of the broader market trends. Instead of waiting for the economic environment to improve, investors should pick stocks that have the potential to outperform even in unfavorable market conditions. Thus, to stay ahead of the curve, they should pick stocks with strong growth potential.

4 High-Growth Finance Stocks to Buy Now

With the help of the Zacks Stock Screener, we have zeroed in on four finance stocks that carry a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a Growth Style Score of ‘A’. Our research shows that stocks with Growth Style Score of ‘A’ when combined with a Zacks Rank #1 or #2 offer the best upside potential. 

NMI Holdings, Inc. (NMIH - Free Report) , through its subsidiaries, provides private mortgage insurance in the United States. This Zacks Rank #1 company is based in Emeryville, CA.

Headquartered in Boston, MA, Eaton Vance Corp.’s (EV - Free Report) principal business is creating, marketing and managing investment funds and providing investment management and counseling services to institutions and individuals. It carries a Zacks Rank #2.

New York-based Greenhill & Co., Inc. (GHL - Free Report) is a leading independent investment bank that provides financial advice on significant mergers, acquisitions, and restructurings. This Zacks Rank #2 company assists private funds in raising capital from investors and manages merchant banking funds.

Based in New York, Evercore Partners Inc. (EVR - Free Report) is a leading investment banking boutique providing advisory services to prominent multinational corporations on significant mergers, acquisitions, divestitures, restructurings and other strategic corporate transactions. This Zacks Rank #2 company also has a successful investment management business through which it manages private equity and venture capital funds for sophisticated institutional investors.