Citi: Time to buy financials

Time clock Grand Central Terminal
Barcroft Media | Getty Images

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?

With the Financial Select Sector SPDR Fund down nearly 7 percent year to date versus the S&P 500 at roughly flat on the year, Citi Research upgraded diversified financials to an "overweight" rating.

"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.


Contact Investing

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    Get these newsletters delivered to your inbox, and more info about our products and service. Privacy Policy.