After financials drastically lagged this year, Citi Research finally believes the sector is compelling enough to buy. So what are the best opportunities in the category?
"Underperformance thus far this year provides a fortuitous time to step up," Citi Research's chief U.S. equity strategist, Tobias Levkovich, wrote in a note to clients Friday. "The opportunity in earnings estimate revisions (in financials) have collapsed to levels that are unsustainably low and should rebound."
The strategist states when "estimate revision momentum" starts to improve, stock prices historically follow suit. Moreover Levkovich likes how the sector sentiment among investors and sell-side analysts is negative, which could provide more upside when it turns.
Here are the financial stocks on Citi Research's recommended list.