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NEW YORK (

TheStreet

) -- At the end of a long week for bank stock investors following

Standard & Poor's downgrade of its long-term debt rating for the United States

last Friday, what have we learned?

For one thing, if you had conviction for a long-term holding in a bank stock a week ago it would be pretty silly to dump it now. What economic news have you received over the last week to change your view so much that you're willing to take a bath?

Financial sector investors need the strength of an ape to read their account statements.

S&P's downgrade and the European financial crisis haven't changed the fact that most U.S. financial companies are in much better shape than they were a few years ago. Nearly all of the large banks have repaid government bailout funds, most are turning a profit, and most a grossly undervalued relative to their tangible book value and their forward earnings estimates.

Moving past

Bank of America

(BAC) - Get Bank of America Corp Report

, which is

the great unknown for investors

, with seemingly endless headline risk and a mountain for CEO Brian Moynihan to climb while cleaning up

Ken Lewis's mess

, there are bargains to be had for long-term investors with any belief in the future of the U.S. economy.

TheStreet Recommends

The news headlines are geared toward a day-trading approach. That sort of approach won't work for most investors in this environment. It's best left for the professionals. And the

machines

. And they will clean your clock if you try and get too cute with the triple-leveraged inverse ETFs.

What you can do -- again, if you are willing to actually make a long term commitment and make what is actually a contrarian play in the current environment -- is look to value, focusing on names that are profitable, growing their core businesses and seeing limited credit risk.

Capital One

(COF) - Get Capital One Financial Corporation Report

is a prime example. After a long period of diversification of its balance sheet through acquisitions, the company is "going with what it knows," in following-up its liquidity-enhancing purchase of ING Direct from

ING Goep

(ING) - Get ING Groep NV Report

, with a purchase of a $30 billion U.S. credit card portfolio from

HSBC

(HBC)

.

Capital One -- like its pure-play credit card competitors

American Express

(AXP) - Get American Express Company Report

and

Discover Financial

(DFS) - Get Discover Financial Services Report

-- has been posting

very strong earnings

, as the card business has returned to its gravy-train ways.

And at Thursday's market close, Capital One was trading for just seven times the consensus 2012 earnings estimate of $6.08 a share, among analysts polled by FactSet. For the past several quarters, most of the big banking names have beaten the consensus earnings estimates.

Just sayin'.

If you want to take a real bottom-fishing approach based on value, shares of

Citigroup

(C) - Get Citigroup Inc. Report

are trading for roughly 0.6 times tangible book value. What? No premium for a profitable bank with more than half of its revenue and earnings coming from business outside the U.S.? Sounds like a cheap, low-risk international growth play to me. And CEO Vikram Pandit's "good bank/bad bank" strategy of trimming the bank's balance sheet, while making money and improving its capital position is working.

For more on Citi and other names trading below tangible book, see

TheStreet's

10 Bank Stock Picks for Bottom-Fishing Investors

.

Take a marquee name like

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

. It trades for just 1.1 times its tangible book value of $31.52, according to SNL Financial, and just six and a half times the consensus 2012 EPS estimate of $5.68. And the company has been profitable all through the credit crisis! Do you think the current economic situation is as bad as the doldrums of late 2008? Didn't think so. JPMorgan's a screaming buy.

The list goes on and on. If you are sour on the big names, with their revenue challenges, you could consider

TheStreet's

list of

large banks booking the largest year-over-year gains in revenue

. Some of these names, including

Wintrust

(WTFC) - Get Wintrust Financial Corporation Report

, have achieved the revenue improvements by purchasing failed banks from the

Federal Deposit Insurance Corp.

Then again, Wintrust has also increased its lending on its own.

The bottom line is that investors need to look beyond the hysteria. We're close enough to the insanity of 2008 and the financial bottom in early 2009, to know that things really are better now. A clear-headed approach, along with some research into which banks are seeing success despite the slow economic recovery, can lead to some very solid gains over the long haul.

RELATED STORIES:

10 Bank Stock Picks for Bottom-Fishing Investors >>

Bank of America: Not Worth the Risk >>

Citigroup Selloff Is Overdone >>

--

Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here:

Philip van Doorn

.

To follow the writer on Twitter, go to

http://twitter.com/PhilipvanDoorn

.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.