Barron’s Analyst Andrew Bary recommended buys and sells in the financial sector in this week’s Barron’s”

BUYS

Investors with a six-to-twelve-month horizon may want to look at financial stocks, many of which are trading below ten times the forward price-to-earnings ratio:

Regional banks, which had been pummeled until a sharp rebound that started Wednesday, have deposit bases that are so valuable that buyers of banks historically have paid sizable premiums to get them. Deposits now are being accorded little or no value throughout the banking industry as many institutions, including SunTrust Banks (STI), Marshall & Isley (MI), Comerica (CMA), Wachovia (WB) and Zions Bancorporation (ZION) trade around their tangible book values — a conservative measure that excludes goodwill and other intangible assets.

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Most financial stocks look attractive, including securities firms Lehman Brothers and Merrill Lynch (MER), banks including Bank of America (BAC), SunTrust and Wachovia, as well as insurers ranging from American International Group to Allstate (ALL) and Prudential Financial (PRU). Except for AIG, the major property-and-casualty and life insurers have limited exposure to troubled assets like subprime mortgages and offer a lower-risk way to play further gains in financial stocks.

SELLS

Fannie Mae (FNM), Freddie Mac (FRE) and Washington Mutual (WM), the country’s largest thrift. They all facemajor mortgage problems

Track Andrew Bary’s stock picks at:

http://www.trackthepros.com/categories.php?category_id=322