Goldman Sachs thinks higher interest rates and deregulation will be music to the ears of investors in banks. 

The investment bank's chief equity strategist David Kostin expects the S&P 500 to rise by 5% to 2,850 by year end. Kostin has outlined these two themes for investors to work into their strategic planning:

Look Towards 2019

Kostin recommends investors look beyond tax-reform aided 2018 earnings growth. Sales and profits will continue to grow in 2019, Kostin says -- the latter is likely to increase by a double-digit percentage. 

Deregulation & Lower Taxes

Less regulation, more profits points out Kostin. 

"Deregulation benefits Financials. Industrials and Tech stocks with low variability in sales growth will outperform." Kostin says. 

12 Bank Stocks to Buy

Out of Kostin's two market themes, it's the banking one that could prove most lucrative in the near-term. With the Federal Reserve well into their rate hiking cycle, bank stocks will likely come back into favor after a recent pullback.

Here are Goldman's top 12 picks from the banking sector:

  1. Bank of America (BAC)
  2. Wells Fargo (WFC)
  3. Citizens Financial Group (CFG)
  4. Regions Financial (RF)
  5. Comerica (CMA)
  6. PNC Financial Sevrices (PNC)
  7. KeyCorp (KEY)
  8. Suntrust Banks (STI)
  9. State Street (STT)
  10. Northern Trust (NTRS)
  11. Capital One Financial (COF)
  12. Discover Financial (DFS)

Here are 10 stocks Goldman believes will outperform the S&P 500 in 2019.