NEW YORK ( TheStreet) -- TheStreet's Jim Cramer and Stephanie Link discuss the recent move in financial stocks and why they still see value in the sector.
There has been some selling recently in the banking names even though the sector has risen since the start of the year.
Cramer said most people don't understand a banking cycle and that there is no reason for the group to stop moving higher. He said that the banking cycle can be virtuous -- if net interest margins are going higher for both investments and loans.
allows rates to rise slowly, banking stocks will be the direct beneficiaries of higher rates, Link and Cramer agreed.
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has also announced that it has seen better-than-expected trading revenue, Link said. That means earnings estimates should start to increase, something that will be good for
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, she also said.
With higher trading profits and rising rates, the bank stocks may finally be getting back to normalized earnings, something investors have not seen since the recession, Link said. A rebounding housing market also has helped relieve some pressure.
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has redone a lot of its loans that were underwater, Cramer said.
Link suggests adding to these banks on a dip. She expects that some investors and traders will be taking some gains after the large run this year and ahead of the quarter, which is at the end of June.
"Things are not bad with the market if bonds go down and yields go up -- if you're a bank," Cramer said.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, owned shares of Goldman Sachs, Hartford Financial, JPMorgan Chase, KeyCorp and Wells Fargo.
-- Written by Bret Kenwell in Petoskey, Mich.