With analysts now calling for an interest rate hike by October, some investors are starting to worry about the outlook for financial stocks, which have been major beneficiaries of low rates over the past few years.

Although a number of banks and brokers have reported solid first-quarter earnings recently, bears say the good times are about to come to an end, arguing that higher rates will hurt business and that the group is overvalued after a big run-up over the past 12 months.

But several industry experts say these concerns are exaggerated and that nimble investors can still make money in the group this year.

"Financials are not cheap and do have exposure to rising rates, but there are still some good values to be had," said Richard Erin Caddell, an analyst at Blaylock & Partners.

Caddell noted that the average bank currently trades at around 15 times trailing earnings, which is above the 20-year average of 11.5 times. But stocks such as J.P. Morgan ( JPM) and U.S. Bancorp ( USB) are more reasonably valued and sport dividend yields of over 3%, making them intriguing investments.

Jeffery Harte, an analyst at Sandler O' Neill, also likes J.P. Morgan and said Citigroup ( C), which is poised to release earnings on Thursday, is another top pick. But Harte is actually bullish on the entire bank and brokerage sector, saying shares are fairly valued on the whole.

"When you come into a recovery, a fundamentally improving environment, they shouldn't just trade at their historical averages -- they should trade closer to prior peak valuations," he said.

Harte and other analysts say that if the Federal Reserve were to raise interest rates in the fall, it would signal that the economy is rebounding, and that would be a positive development for many financial stocks.

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