2023 has been a bounce-back year for the stock market thus far, led by a resurgence in technology stocks. The Nasdaq Composite is up some 28% year to date. However, the best deals right now are in a different sector, one that was hard hit early in 2023 by a short-term crisis after getting hard hit in 2022 by quickly rising interest rates. That sector, of course, was financials.

Here are three otherwise excellent stocks that are currently trading at a significant discount -- all from the financial sector. Let's find out a bit more about each and learn why these three stocks might be fantastic deals right now.

1. Bank of America

It has been a while since the second largest bank in the U.S., Bank of America (BAC -0.89%), has been this cheap. Aside from a short time early in the pandemic in March 2020, Bank of America has not had a price-to-earnings (P/E) ratio this low since early 2016. It currently has a P/E ratio of 8.7 and a forward P/E ratio of 8.2. The stock is trading at about $29 per share, down roughly 13% year to date, as of June 20. With a price-to-book ratio of 0.91, it is trading below its book value per share, another prime indicator that it is undervalued.

It has been a difficult year for most bank stocks, for a variety of reasons, not the least of which is the sell-off that followed the collapse of three regional banks in March and April. While some banks continue to struggle, Bank of America is not one of them. After the bank failures, depositors fled to the larger, more stable banks with their deposits, and Bank of America saw a surge of new deposits in late March. We'll have to see if that trend continued when second-quarter earnings come out in July.

Bank of America should be able to widen its net interest margins, as rates are still high. But deposit costs should stabilize, as the bank shouldn't have to compete as hard for deposits with higher interest payouts in this flight to safety. 

Bank of America, the second-largest position among Warren Buffett and Berkshire Hathaway's holdings, trades cheaply. It will get through this period of economic uncertainty just fine and should surge when the economy improves. 

2. Visa

The U.S.'s largest payment processor, Visa (V 0.16%), is also trading at a discount. Visa has been one of the best and most consistent growth stocks on the market over the past decade-plus. As the payment processing leader, it is part of a duopoly with Mastercard with its massive network through which the vast majority of payments flow. Unlike banks and other payment processors that are also lenders, Visa generates most of its revenue from swipe fees, so it doesn't have the type of credit risk that some of its competitors and banks have.

What is remarkable about Visa over the years is its ability to navigate downturns and choppy markets. It obviously surges when the economy is strong and spending is high. But it also tends to outperform when things go south, as it did last year when the stock was down just 3% in the 2022 bear market. That's because of a couple of things, including its efficient business model, whereby it generates huge margins because it is asset-light and highly efficient. There has also been a growing trend toward cashless payments, which will continue to benefit this market leader.

Visa currently has a P/E ratio of around 30, which is lower than it has been for most of the past seven years or so. It also has an attractive forward P/E of 22.8, which is also low in terms of recent history. It's a good time to buy.

3. Axos Financial

Axos Financial (AX 0.25%) is not a household name like the other two choices, but it is indeed a good value right now. Axos is one of the first online banks -- in fact, it was originally called the Bank of the Internet before rebranding to Axos. With about $19.8 billion in assets as of March 31, Axos is a mid-sized bank, but unlike many others its size, it navigated the recent industry turbulence quite well, with the share price up about 1% year to date.

While most smaller banks were seeing deposit outflows, Axos was able to increase deposits in the latest quarter by roughly 27% year over year to $17 billion. It also saw a 33% jump in net interest income to about $199 million and increased its net interest margin to 4.41% from 4.02% after the same quarter -- Axos's fiscal third quarter -- a year ago. A big reason Axos was able to not only hold on to, but boost, its deposits is because about 90% of them are FDIC-insured, so its customers felt safe during the meltdown.

The other benefit that Axos has long enjoyed as one of the largest digital-only banks is its asset-light model, as expenses are kept relatively low with no physical bank branches. That results in a low 48% efficiency ratio, down from 51% a year ago (lower ratios are better). When most banks are happy with an efficiency ratio under 60%, Axos is able to generate more profit per dollar invested. 

Chart showing Visa's price higher than Bank of America's and Axos Financial's since 2014.

BAC data by YCharts

That efficiency helped Axos stock post a nearly 13% annualized return over the past 10 years as of June 20. And a big draw for investors right now is its cheap valuation, with a P/E ratio of just 8.6 as of June 20, down from 12.3 on March 31, 2022. It also has a low price-to-book ratio of 1.3.

Like Bank of America and Visa, Axos is a good buy -- particularly at this low valuation.