Bank stocks are still undervalued even after trump rally, strategas says

Strategas Research Partners said bank stocks have further room to run even after the big post-election rally in the shares. The research firm, which reiterated its overweight rating on the

sector this week, cited data showing financial stocks undervalued relative to the amount of earnings they contribute to the economy. In another move, Strategas reaffirmed a market weight

rating for energy stocks due to weak profitability relative to their market value. "Despite the major move in many large-cap financials, we find it hard to find enthusiastic bulls on

the sector in our travels. This is especially true among hedge funds," strategist Jason Trennert wrote in a note to clients Monday. "Although a somewhat crude measure of investor

enthusiasm, the difference between the earnings weight in the index and its market-cap contribution can be somewhat telling." The Financial Select Sector SPDR Fund is up 17 percent

since the Nov. 8 election through Tuesday. Source: Strategas Research Partners Trennert cited how the financial sector represents 21 percent of the S & P 500's earnings, but only

constitutes 15 percent of its market capitalization. On the flip side, he noted the energy sector is 7.5 percent of the market's value, but doesn't contribute any positive

earnings. "We believe that strength of the dollar will make it difficult for the Fed to raise short rates aggressively this year while the long end will reflect the potential for

stronger real GDP growth," he wrote. "A steepening yield curve and a friendlier environment for the banking sector will, in our view, lead to continued outperformance in the face

of widespread skepticism." Investors can buy the Financial Select Sector SPDR Fund if they want to take advantage of the firm's bullish bank stocks call. Johner Images | Getty

Images Strategas Research Partners said bank stocks have further room to run even after the big post-election rally in the shares. The research firm, which reiterated its overweight rating

on the sector this week, cited data showing financial stocks undervalued relative to the amount of earnings they contribute to the economy. In another move, Strategas reaffirmed a market

weight rating for energy stocks due to weak profitability relative to their market value. "Despite the major move in many large-cap financials, we find it hard to find enthusiastic

bulls on the sector in our travels. This is especially true among hedge funds," strategist Jason Trennert wrote in a note to clients Monday. "Although a somewhat crude measure of

investor enthusiasm, the difference between the earnings weight in the index and its market-cap contribution can be somewhat telling." The Financial Select Sector SPDR Fund is up 17

percent since the Nov. 8 election through Tuesday.