NEW YORK (TheStreet) - Out of favor large-caps and discounted brokers will be outperformers in 2013, according to Sterne Agee analyst Todd Hagerman.
In a report Thursday, the analyst highlighted "earnings diversity, expense leverage, and ongoing credit leverage" as important earnings drivers for the sector in 2013, though he expects ongoing budget discussions and associated uncertainty to keep economic growth at a "pedestrian pace" through the first half of 2013.
Investors should avoid small/mid-cap regional banks that are overly dependent on spread income and have little expense and credit leverage. Instead they should use volatility in the stock market to pick up large-cap stocks trading at deep discounts.
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