Regional banks traded mostly higher on Wednesday after Credit Suisse upgraded the group to "overweight" on a belief that most of the major companies won't need to raise additional capital.
So should investors start looking into banks again? David Ellison, chief investment officer of FBR Equity Funds, shared his views and his favorite bank stocks.
“I don’t think [banks] are well-capitalized—the stronger ones are capitalized enough to try to make loans and grow, but the bulk of the industry is still struggling with non-performers and charge-offs,” Ellison told CNBC.
He said stock investors should stay with the stronger companies.
“The ones that don’t need capital, don’t need government money and are still going to be fine,” he explained.
Ellison said there are plenty of banks that are in "good shape." He likes companies including JPMorgan Chase, Hudson City, Iberiabank, Washington Federal.
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Ellison does not own shares of JPM, HCBK, IBKC.