The second half of 2015 was a bit challenging, but the year has seen a decent overall performance by the Finance sector. While the near-term earnings projection remains dismal, the sector is not expected to disappoint investors in the quarters ahead. This is because, the sector’s performance majorly dependents on the nation’s economic health which shows continued improvement.   

The U.S. economy is progressing well as indicated by improved real GDP numbers for 2015, continued fall in unemployment rate, higher consumer spending and stabilizing housing market.

Apart from this, the possibility of two rate hikes this year has provided a much needed certainty to the sector. Barring REITs, the other components of the Finance sector – banks, brokerage firms, asset managers and insurers – benefit from higher interest rates.

This is perhaps the best time to bet on a few finance stocks that have the potential to outperform.

How to Pick the Best Stocks?

With the help of Zacks Stock Screener we have selected finance stocks with Zacks Rank #1 (Strong Buy) or #2 (Buy). We further narrowed the list by applying our newest methodology, the VGM score ('V' for Value, 'G' for Growth and 'M' for Momentum). The stocks we finalized have a VGM score of “A”.

Here are the four Finance stocks that you may add to your portfolio:

Fortress Investment Group LLC (FIG - Snapshot Report), headquartered in New York, is global alternative asset manager. The company raises, invests and manages private equity funds and hedge funds.

Zacks Rank #2
Market Cap: $1.83 billion
Earnings Growth Expectation for 2016: 18.97%

Forestar Group Inc. (FOR - Snapshot Report), based in Austin, TX, operates as a real estate, and oil and gas company.

Zacks Rank #1
Market Cap: $425.87 million
Earnings Growth Expectation for 2016: 465.22%

HomeStreet, Inc. (HMST - Snapshot Report), headquartered in Seattle, WA, is engaged in real estate lending as well as retail and business banking operations in the Pacific Northwest and Hawaii.

Zacks Rank #2
Market Cap: $504.75 million
Earnings Growth Expectation for 2016: 12.06%

Synchrony Financial (SYF - Snapshot Report), based in Stamford, CT, provides private label credit cards, dual cards and small and medium-sized business credit products; promotional financing for consumer purchases; and promotional financing to consumers.

Zacks Rank #2
Market Cap: $23.66 billion
Earnings Growth Expectation for 2016: 6.46%