Financials are one of the best performing sectors in the S&P 500 this year, and some Wall Street strategists say the banks will continue to outperform, given improving loan fundamentals, attractive valuations and rising dividends.
So far this year, financials have gained 21 percent, which is the second best performing sector. Last week, the financials climbed the most of any sectors, rising 3.7 percent, and they were one of the best performing sectors Monday, making gains while most sectors declined.
Jonathan Golub of UBS, in a recent research note, argued that this sector will continue to outperform. For one, the sector boasts improving loan fundamentals including rising volumes and a steeper yield curve. Secondly, the sector is attractively valued: financials trade at 1.24 times book value, which is a discount to their historical average of 1.86.