NEW YORK ( TheStreet) -- Research firm Sterne Agee unveiled its third quarter earnings preview for banks and thrifts, and they recommend just three names in their coverage universe, which does not include the most popular bank stock, Citigroup ( C) and Bank of America ( BAC).

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Wells Fargo ( WFC) is one of the names on the list. The Sterne Agee analysts estimate Wells will earn $3.60 per share in 2012, while the shares closed Monday at $25.38--roughly seven times that figure. That is a lower multiple than less-profitable peers, the analysts argue.

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Also on Sterne Agee's buy list is BB&T ( BBT). Despite concerns about economic weakness in the Southeastern U.S., the Sterne Agee analysts argue BB&T's strong capital cushion and pre-provision earnings, plus an additional backstop against potential losses in troubled areas such as Florida and the Alabama coast, will allow the bank to outperform.

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In Puerto Rico, the analysts like Banco Popular ( BPOP). They argue the bank's sale of a 51% stake in payment technology firm EVERTEC in July for $600 million should have "put to rest" any worries about the strength of its capital position. The analysts see Popular breaking even in the third quarter, slightly better than the consensus loss of a penny per share.

Sterne Agee also has two sell recommendations going into the quarterly reports: Atlanta-based SunTrust Banks ( STI) as well as another Puerto Rico-based bank, Doral Financial Corp. ( DRL).

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In the case of SunTrust, the analysts see it as "meaningfully under-reserved relative to peers." Bringing SunTrust back into line from a capital perspective would require an additional $2 billion, not to mention $2.5 billion need to repay TARP, Sterne Agee writes.

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As for Doral, Sterne Agee cites continued deterioration in credit quality and declining reserves. Given those factors, as well as a "stressed operating environment" in Puerto Rico," the analysts described themselves as "skeptical of a company with limited loan loss reserve coverage."

-- Written by Dan Freed in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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