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All the major U.S. indices – S&P 500, the Dow Jones Industrial Average (DJIA) and NASDAQ – closed significantly lower on Wednesday before rallying on Thursday as the latest news from Washington made investors apprehensive.

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The news from Washington about President Donald Trump interfering with a federal probe along with calls for independent investigation related to probable collusion between his election campaign and Russia initially jolted investors.

These matters create uncertainty about Trump’s ability to deliver on proposed tax and banking sector reforms, and infrastructure spending. With banks expected to be one of the biggest beneficiaries from these changes, banking stocks took a major hit.

The Financial SPDR (NYSEARCA:XLF) tanked 3.2% and the KBW Nasdaq Bank Index (INDLEXNASDAQ:KBW) plunged 4.1%.

Nonetheless, this dip provides a buying opportunity for banking stocks. Fundamentally banks have become stronger and are delivering improving results, with the recently concluded earnings season would concur.

Apart from this, an improving rate scenario and gradually improving operating environment are expected to support the banks’ financials in the upcoming quarters.

Choosing These Winning Bank Stocks

Since November, banking stocks have been rallying, making them highly priced. So now is the time to add a few of them, as all of them have dipped.

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But picking up potential winners among the huge number of banks could be daunting. Hence, we have taken the help of the Zacks Stock Screener to easily select such stocks.

We have shortlisted stocks with year-over-year earnings growth of 15% or more in the recently concluded quarter and a VGM Score of ‘A’ or ‘B.’ Further, these stocks carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Here are the top three bank stocks:

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