US Markets

Financial stocks one pocket of value left, JPMorgan strategist says

Financials a 'pocket of value': Lebovitz

There is a lot of headline risk in financials, but they look very cheap right now, JPMorgan's David Lebovitz told CNBC on Friday.

The sector has taken a hit thanks to low interest rates, pressure from regulators and the scrutiny surrounding Deutsche Bank and Wells Fargo.

The KBW Nasdaq Bank index is off almost 3 percent in 2016, and financials as a whole are the second-worst performer on the .

"When I look at the markets globally, the one pocket of value that is left is financials," the global market strategist for JPMorgan Asset Management said in an interview with "Power Lunch."

Lebovitz said that for those using valuation as a guide to investing, there are opportunities in the sector. He thinks U.S. names look more attractive than their European counterparts and noted that relative to 2008, globally banks are looking much healthier.

Banks may become a dividend play, now that the Federal Reserve has given them clearance to start raising dividends, he added.

"I think you might see financials start to catch a bid on the back of this low volatility, high dividend trade that's been in place for the better part of this year," Lebovitz said.

However, he cautioned that sometimes stocks are cheap for a reason.

"There is a lot of headline risk right now and I think the biggest thing investors need to be cognizant of is the ability for contagion, for sentiment to deteriorate around these names and really push the market lower," he said.

— CNBC's Jeff Cox contributed to this report.