5 Best Bank Stock Ideas From JPMorgan

NEW YORK (TheStreet) - Financial stocks are off to the races in 2012, but JPMorgan equity strategist Thomas Lee argues the sector rebound is just getting started.

The Financial Select Sector SPDR(GS) , a popular exchange traded fund that tracks financial stocks, is up 20.85% so far in 2012 compared to an 8.47% rise in the Dow Jones Industrial Average. That is a pick reversal from 2011, when the XLF lost 18.07% versus a 5.57% gain for the Dow.

Lee's call stands in sharp contrast to a recent report from Citigroup analysts following a conference hosted by the bank. Citigroup noted attendance was "somewhat thinner than in recent years" and described investor sentiment as "broadly skeptical, cautiously optimistic at best."

Lee turns that argument on its head, contending it leaves plenty of room for new money to come pouring into financial sector stocks.

"A multiple of factors favor Financials including improving credit conditions (steepening curves), US housing revival, regulatory headwinds flattening and record low valuations," Lee argues in his report.

Here are JPMorgan's 5 picks for bank stocks.

5. Bank of America(BAC)