Recently published October data of the U.S. Bureau of Economic Analysis painted a bright picture ahead for the national economy. A falling unemployment rate and higher average hourly earnings have rekindled hopes for a rate hike in December.

Nevertheless, a still-low inflation rate remains one factor that might bar the Fed from raising. On Aug 27, 2015, the government reported a core inflation growth rate of 1.2%, below the target rate of 2%.

Banking on Value to Counter Rate Hike

Given the possibility of a rate hike in the upcoming December meet of the Federal Reserve, we believe investors would do well to find the safety of value stocks. Picking value stocks which truly trade at a discount, especially from the finance sector, can shield an investor from the volatility in stock market. This is because, owing to the very nature of their business, finance sector industries such as banking, insurance, asset managers and brokerage firms, are likely to gain from an interest rate hike.

Moreover, if these value stocks possess solid earnings prospects, the chances of price appreciation are amplified. Holding such stocks in the long run makes great investment sense.
 
5 Value Finance Stocks with Earnings Potential

We have chosen 5 finance stocks that are currently well-placed to gain from an interest rate hike. Further, these stocks have strong inherent earnings growth potential, which translates into higher chances of price appreciation. For selecting these stocks, we have used our style score system.

Our research shows that stocks with Value Style Scores of ‘A,’ when combined with a Zacks Rank #1 or 2 (Strong Buy or Buy), offer the best investment opportunities in the value investing space. Further, to filter the chosen stocks, we have used the criterion of estimated EPS growth rate of more than 20% for 2015.

Cash America International, Inc. (CSH - Snapshot Report), headquartered in Fort Worth, TX, is a specialty financial services company. The firm is mainly engaged in the acquisition, establishment and operation of pawnshops which advance money on the security of pledged tangible personal property.

Zacks Rank #1

Value Score: ‘B’

This Year’s Estimated Growth (F(1)/F(0)) = 49.71

Based in, Reno, NV, Employers Holdings, Inc. (EIG - Snapshot Report) is an accident and health insurance provider in the U.S. The company markets its products through independent local, regional, and national agents and brokers, as well as through strategic partnerships and alliances.

Zacks Rank #1

Value Score: ‘A’

This Year’s Estimated Growth (F(1)/F(0)) = 35.92

Headquartered in Fort Worth, TX, Hallmark Financial Services Inc. (HALL - Snapshot Report) is engaged in the sale of property and casualty insurance products.

Zacks Rank #1

Value Score: ‘A’

This Year’s Estimated Growth (F(1)/F(0)) = 72.46

Heritage Insurance Holdings, Inc. (HRTG - Snapshot Report), headquartered in Clearwater, FL, is a property and casualty insurance holding company. It provides personal residential insurance for single-family homeowners and condominium owners.

Zacks Rank #1

Value Score: ‘A’

This Year’s Estimated Growth (F(1)/F(0)) = 58.24

Based in Amsterdam, the Netherlands, AerCap Holdings N.V. (AER - Snapshot Report) is an aircraft leasing company, engaged in leasing, financing, sale, and management of commercial aircraft and engines.

Zacks Rank #2

Value Score: ‘A’

This Year’s Estimated Growth (F(1)/F(0)) = 28.57