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Morgan Stanley could be your best bet among underperforming financials

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Here's how financials shape up 10 years after the Financial Crisis

Financials might be falling from their perch.

The sector saw strong gains to start the year, initially outperforming the broader markets. However, the group has stalled over the last week, falling nearly 4 percent, making it one of the worst-performing sectors in that time.

Citigroup, Bank of America, Morgan Stanley and Goldman Sachs are down 4 plus percent since the start of Mach, but even as they underperform, there could be one name to play for a rebound.

Two market watchers point to Morgan Stanley as a buying opportunity, saying the stock looks good from a technical and fundamental standpoint.

Strategic Wealth Partners' Mark Tepper believes the bull market is in its final innings, and Morgan Stanley has diverse revenue streams that will hold up even if the economy slows.

"With Morgan Stanley you know we have a company that has M&A exposure which is good, and because we're in this slow-growth economy right now where companies are in acquisition mode to fund further growth, M&A is good," he said Thursday on CNBC's "Trading Nation."

He added that as volatility picks up, "active management is going to benefit" and that the bank's assets under management revenues "is a nice diversification source" that's "high margin."

Morgan Stanley has gained just 4 percent this year, underperforming the S&P 500 and the financial sector, which are up 10 and 9 percent respectively.

While Tepper likes Morgan Stanley relative to the rest of the bank stocks, he's not expecting the stock to move meaningfully higher.

"I mean the banks really don't excite me because it's tough for them to make money with a flat yield curve, and we don't see that changing anytime soon," he said.

Like Tepper, Instinet's Frank Cappelleri says that Morgan Stanley is the most attractive financial stock at current levels, although he, too, is not pounding the table on this trade. He notes that the stock has been firmly in a downtrend over the last year, shedding more than 30 percent since its recent high last March.

But he says the stock has exhibited this kind of underperformance before, and that such behavior has sometimes led to a turnaround in the stock.

"The stock has been through this before. … I point to the 10-year chart. We see from 2009 to 2012 the stock was down 70 percent and then from 2015 to 2016 another 50 percent. Whole time it was able to make higher lows on a long-term basis and those rallies coincided with relative strength versus the XLF, " the financial sector ETF.

Cappelleri argues that if the stock can maintain its relative strength — a technical indicator showing a stock's momentum versus competitors — it could be ripe for a breakout.

"If it can bounce, it could trigger a rally, which I think can play out both on an absolute and relative basis," he said.

Disclosure: Tepper's Strategic Wealth Partners owns shares of Morgan Stanley.