It seems odd that after what appears on the surface to be a true market rally, the major indexes are all just back above the break-even level. However, with two 10% corrections on the books in a six-month period, many good stocks were taken down to levels not seen in some time. One thing is for sure, the market rally is putting a firmer bid under some of the top financial companies, which in turn look like they may have turned the corner.

In a new research report, Jefferies does caution that while the volatility from the sell-offs did put some stress on the financial sector, especially the companies more skewed to equities, valuations have rebounded from multiyear lows earlier in the year. The analysts feel that the risk/reward heading into first-quarter earnings still appears to be leaning to the positive.

We found four stocks rated Buy at Jefferies that appear to have very solid upside potential.

Affiliated Managers Group

This company reported outstanding first-quarter earnings and the rest of the year looks solid as well. Affiliated Managers Group Inc. (NYSE: AMG) is a global asset management company that invests in boutique investment management firms called “affiliates.” The performance of these affiliates drives the company’s own performance, and AMG acts as a fund of funds for these entities.

The company also assists its affiliates in strategic matters, marketing, distribution, product development and operations. AMG holds equity stake in its affiliates along with the independent management, which is responsible for deployment of the funds and generating returns. The affiliates are identified based on their growth potential, with products focusing on global equities, emerging market equities and alternatives. AMG manages three distribution channels through its affiliates.

With just over 10% fixed income exposure, the company is one of the least exposed in terms of assets under management and the most levered to equity. That is fine in a potential rising interest rate environment, but it has proven a touch more volatile in the recent market sell-offs.

The Jefferies price target for the stock is $197. The Thomson/First Call consensus price target is $197.78. The stock closed on Wednesday at $170.49, up almost 4% on the day.

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