Buy these financial stocks: Analysts

Financial stocks rallied Thursday, a day after 29 out of 31 banks passed the Federal Reserve's latest stress test. For investors looking to get in on the action, there are certain names that stand out, two analysts told CNBC.

Glenn Schorr, senior research analyst at Evercore ISI, is overall bullish on the sector, and likes Citigroup and JPMorgan Chase.

"Both [are] pretty cheap socks, both in the grand scheme of things have OK and getting better capital return," he said in an interview with "Power Lunch."

JPMorgan runs a "phenomenal set of businesses," making about $22 billion a year, he added. When rates go up Schorr believes the bank will be a beneficiary.

A sign is displayed outside Citigroup Center in New York.
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A sign is displayed outside Citigroup Center in New York.

On Wednesday, the Fed approved the capital plans of 29 banks, which cleared the way for the institutions to issue dividends and stock buybacks. The central bank objected to the plans by the U.S. units of Deutsche Bank and Santander.

Bank of America's approval, however, is contingent upon it submitting a revised capital strategy by the end of September. Shares of the bank were down on the news.

After the results were released, JPMorgan Chase announced it plans to raise its quarterly dividend 4 cents to 44 cents per share. It will also repurchase up to $6.4 billion in common stocks starting next month.

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Citigroup said it intends to hike its quarterly stock dividend to 5 cents per share and buy back up to $7.8 billion in common stock starting in the second quarter of 2015.

Dan Werner, banking analyst with Morningstar, likes companies with larger consumer exposures like Capital One, Discover and BofA. He sees limited upside for the other banks.

Both Capital One and Discover are trading at about a 15 percent discount to current fair value, he said.

Plus, "with low unemployment, finally getting some wage growth here, the consumer is going start to spend again and we think part of that is going to be through use of their cards," Werner added.

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Discover said it expects to raise its quarterly dividend to 28 cents per share, from 24 cents. It also plans to repurchase up to $2.2 billion in common stock during the five quarters ending June 30, 2016.

Capital One intends to buy back more than $3 billion in common stock through the second quarter of 2016 and raise its quarterly dividend to 40 cents per share.

BofA will likely be able to raise dividends later this year, Werner said.

"Clearly they've been through this process before and they obviously know what they need to do to get their deficiencies rectified," he said.

—CNBC's Brenda Hentschel and Jacob Pramuk contributed to this report.

Disclosures: Werner does not own Capital One, Discover or Bank of America. Schorr knows or has reason to know that Citigroup and JPMorgan are (or were within the past 12 months) clients of the company.