Bank stocks to double, says Dick Bove

Dick Bove: Banking headed 100% higher
Dick Bove: Banking headed 100% higher

Between record quarterly earnings results and a strong economic forecast for the United States, bank stocks could soon double and should be bought at current levels, banking analyst Richard Bove told CNBC on Tuesday.

Appearing on "Closing Bell," he noted that banks have largely produced three straight years of positive results. The sector could continue to gain steam as the economy picks up, he added.

Bove, the vice president of equity research at Rafferty Capital, pointed out recent comments from former Federal Reserve Chairman Ben Bernanke, who said he expects economic growth to be relatively strong.

"If you're looking at the banking industry as if it was manufacturing and you think of the bank balance sheet as basically a factory, the industry is operating at 65 percent capacity," Bove said.

"If the economy is going to grow at the rate that Mr. Bernanke, myself and others believe, then it will ultimately get to 85 to 90 percent of capacity," he added. "That will drive earnings much higher than they are at the present time and it will get these stocks up to this 2.25 to 2.5 times book level, which will be 100 percent higher than where they are right now."

As the economy improves, Bove said, loan volume will increase for most banks, improving margins and boosting earnings.

—By CNBC's Drew Sandholm. Follow him on Twitter @DrewSandholm.