Mention the word “financials” and many investors still run the other way. That’s understandable, given that banks and their cohorts are closely associated with the Great Recession. But that’s not a good reason to keep avoiding the entire sector.

Actually, investors who bought financials at the market’s bottom in early 2009 have been well rewarded. Since then, the Dow Jones US Financials Index has gained 152.1 percent vs. 121.6 percent for the S&P 500—though it should be noted the sector has yet to erase its losses from the downturn.

Because financial stocks are not back to the heady levels of early 2007, some are priced close to book value; so they’re worth a closer look, as a long-term, contrarian play.

The banks have some of the lowest valuations. But they face a host of challenges—lackluster loan demand, rising operational costs and more regulation. So we suggest focusing on niche players with a high percentage of recurring fee income, to help mitigate risk until the economy improves. The following two stocks are “back-office” financials, providing essential services without which the financial industry would grind to a halt.

Fidelity National Information Services (NYSE: FIS) is one of the largest providers of processing technology to the banking industry, with 14,000 bank clients in 100 countries.

Fidelity’s main business is processing the transactions of banks’ retail and small-business clients, as well as ATM and debit/credit card processing. Understandably, banks are loath to switch core-processing providers, so some 80 percent of Fidelity’s revenue is recurring. And for new services, such as mobile-phone banking, Fidelity is at the forefront. In early September, for example, the company reported that its client base for mobile processing had risen 150 percent from a year ago.

Florida-based Fidelity is also expanding overseas, with a 28 percent jump in international revenue last year. While the company has a long history of mergers and acquisitions within the US, this may slow; Fidelity will most likely have to invest internally in the short term to meet the regulatory requirements of the Dodd-Frank Act.

For 2012, Fidelity slightly lowered its full-year earnings outlook due to the sale of the Healthcare Benefits Solutions business. But earnings are still expected to rise 10 percent to 15 percent from the previous year.

Fidelity trades at 1.4 times book value—roughly half the valuation of its chief competitors. Shares aren’t too far off their 52-week high, so patient investors should wait for a dip below 31 before initiating a new position.

Bank of New York Mellon (NYSE: BK) was formed in 2007 when Bank of New York merged with Mellon Financial to create the world’s largest custodian bank. Some $27 trillion is held in custodial accounts at BNY Mellon for pension funds, other types of institutional investors, asset managers and trusts. In fact, the US Treasury turned to BNY Mellon to do the bookkeeping for the banking-industry bailout.

BNY Mellon and five other banks administer 75 percent of custodial assets worldwide. And they benefit from “sticky” customer relationships due to high switching costs, as well as new industry regulations that induce investment managers to use third parties for asset administration. Because they generate mostly fee income, custodian banks typically have very little credit risk.

While BNY Mellon gets close to 70 percent of its revenue from custodial services, the rest of its business is mostly money management, with some $1.3 trillion in assets, including the Dreyfus mutual funds. Money management does expose BNY Mellon to the vagaries of the market, but overall, about 78 percent of its fee income is recurring.

BNY Mellon had a tough 2011, due to the market swoon, and earnings are expected to be down 3 percent in 2012, although asset growth is running 2 percent to 3 percent annually. In response, management has strengthened the balance sheet and cut costs to improve margins. So analysts expect 2013 earnings to rise 12 percent on the strength of cost-cutting and growth in the bank’s clearing and market-leading ADR business.