Not only are the Financials ready to rebound according to Hilary Kramer of GameChangerStocks.com, she says the "unloved, beaten down" sector will spark a broader rally in the markets. Kramer believes financial stocks will lead the S&P 500 to 25% gains over the next 12-months taking us to 1500 on the benchmark index.
Much of her bank bullishness can be attributed to the simple nature of investment bankers. She anticipates wave of M&A is headed our way as investment bankers get cash-rich corporations to do lots of deals - simply because that's what they do. "Bankers are getting very creative. They're hungry," Kramer says. "Bonus time is now only five months away and they're going to come back strong with all sorts of ways to unlock value. I see M&A being a big driver."
Kramer says the Financials' margins are really strong and the market's most out of favor sector is seeing a turnaround in sentiment. To top it off, some legendary trading desks recently took down a boat load of "dirt cheap" stocks that should soon pay off handsomely.
Her top picks in the sector include Morgan Stanley (MS) which she points out is trading at a fraction of its book value, and boutique investment bank Evercore (EVR). Kramer says despite its share price getting crushed in the past two weeks, Evercore is dominating the league tables, growing revenue by triple digits, and was involved in 5 of the top 5 M&A deals this year.
Kramer is banking on a turn around in this sector, but will the weak economy impact her outlook? "No...not at all. Not when it comes to Financials. Not when it comes to $3 Trillion sitting on the books."