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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Goldman's 7 Best Financial Stocks for 2011

6. NASDAQ OMX Group (NDAQ) provides trading, exchange technology and securities listing to companies worldwide. It operates the NASDAQ stock market, home for technology shares.

The company has seen a tremendous rebound in profitability since the market rally began in 2009. NASDAQ's fourth-quarter adjusted earnings advanced 20% to 55 cents, exceeding analysts' consensus target by 8.5%. Its top-line figure, down 3.9%, outperformed consensus by 5.1%. NASDAQ OMX's operating margin widened from 20% to 22% in the latest quarter as expense growth dropped.

Despite the solid earnings beats, NASDAQ receives lackluster reviews, with 10 "buy" calls and 12 "hold" recommendations. In addition to Goldman, Barclays is optimistic about NASDAQ, ranking its stock "overweight" and predicting another 20% of upside to $32. The stock sells for a forward earnings multiple of 9.7, an attractive 16% discount to the specialized finance industry average. Its PEG ratio, a measure of value relative to growth, of 0.5 reflects a 50% discount to estimated fair value. Recent acquisitions, including Nord Pool and Zoom Vision, are bolstering the company's global platform. Its share-repurchase program lessened the float 6.2% year-over-year.

Goldman removed NASDAQ from its Conviction Buy List on Jan. 12, but maintained its "buy" rating and target. Many near-term catalysts were realized. NASDAQ's stock has jumped 21% in three months. Goldman still likes the company's longer-term prospects.

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