Experts believe bank stocks still have a lot to gain, even though the sector has already rallied 21 percent in the last three months.
The key sector ETF initially spiked 1 percent after the Federal Reserve announced on Wednesday that it was raising its benchmark federal funds rate. It then fell as much as 1 percent amid surprise that there would be three hikes in the coming year, instead of the two it previously forecast in September.
But the banks have further to run in an environment of rising interest rates and potentially strong economic growth, said Paul Miller, managing director and head of financial institutions research at FBR Capital Markets.
"Regulation, we know, is going to go away or the increase in regulation is starting to. The pendulum is swinging the other way and that's going to help out a lot," Miller said on CNBC's "Closing Bell."
Cassandra Toroian, president and CIO of Bell Rock Capital, agreed, saying, "The reality is that we haven't seen in this sector the wind at our back in such a long time and we now have that in a big way going forward for quite a long time it seems."
Miller said, however, that tax cuts and the size of fiscal stimulus will also have a large role in dictating the upside in the financial stocks. He said that he believes "Trump has a mandate" and that the president-elect will push tax cuts and stimulus through.
"We think the downside is relatively protected here, but the upside has much farther to go if these policies get done. But if we wake up six months from now and the tax cut is dead on arrival and the stimulus is not that important, yeah these stocks will give up some of these gains," Miller said.
Toroian said that the financials will do well in both 2017 and 2018.
"Margins are going to do very well and, from a regulatory perspective, it seems as though the burdens and the expenses related to those are going to diminish under the Trump administration, and that's going to have a huge impact on the bottom line for all of them," she said.
Toroian said her firm likes JPMorgan Chase, Bank of America, Goldman Sachs, PNC Financial Services and even some smaller companies in the sector.
Disclosure: Bell Rock Capital owns Bank of America, Goldman Sachs, JPMorgan Chase and PNC Financial Services.