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Power Play: Five reasons to focus on financials

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What's one standout sector investors should follow closely right now? Bob Landry, portfolio manager at USAA Investment Solutions, says it's financials.

He told CNBC's "Power Lunch" on Friday that while financials will remain a difficult investment in the short-term, there is good potential within the sector.

Landry said to focus on financial stocks for the next few years, especially the diversified financials. Here's why:

  1. Expectations are low due to concerns surrounding earnings/revenue growth.
  2. Credit quality overall is quite good (despite prospects for higher loan losses tied to energy sector, which should be manageable).
  3. Capital cushions are substantial, so risk levels are lower.
  4. If longer-term interest rates rise over time, revenues will receive a nice tailwind.
  5. Dividend growth should continue to be quite attractive relative to other sectors.