It's time to strike while the iron is hot for financial stocks.
According to a Feb. 20 note from C.J. Lawrence analysts, financial stocks are positioned especially well following the market correction that took place in equitird earlier this month.
"In the recent market downdraft, the S&P Financial Sector Index declined 11.3% from peak to trough," analysts wrote. "Meanwhile, 2018 earnings per share estimates for the sector have climbed 10% in just the last two months."
"At 13.7x 2018 forecasted earnings per share, and 12.3x 2019 estimates, the S&P Financial Sector Index is priced at historically low multiples of earnings for period of economic expansion," C.J. Lawrence said.
That's good news made even better by double-digit returns on equity and improving margins among financial sector stocks.
While inflation- and interest rate-related volatility is "likely here to stay," analysts said higher rates, a steepening yield curve and an improving overall economy remain constructive for financial stocks.
"We continue to be overweight the sector and would be opportunistic in periods when market volatility throws out financial babies with the proverbial market bathwater," analysts said.