Bank stocks popped big this week on the back of favorable Covid-19 vaccine news from Pfizer (NYSE:PFE). The general idea is that widespread distribution of a highly effective vaccine will spark a rapid economic recovery in 2021, and by extension, breathe life back into depressed bank stocks.

Over the past five days, the SPDR S&P Bank ETF (NYSEARCA:KBE) has rallied about 10%.

That’s a big move for the normally dormant and unexciting bank sector.

The analyst team over at Wells Fargo thinks that their is more to come. Much more.

“We advise getting aggressive on Banks despite Monday’s… run-up. In Banks we have historic valuations, significant scope for upside potential, an uncrowded opportunity, and catalysts in the form of fundamentally-driven reflation and near-term Covid solution(s),” analysts at Wells Fargo said in a recent research note.

I couldn’t agree more.

Bank stocks are dirt cheap today because the U.S. economy is in shambles. But that broken economy is recovering, with the recovery set to accelerate in 2021 thanks to an effective vaccine. As the economic recovery accelerates, dirt-cheap bank stocks will rally in a big way.

With that in mind, here are my five favorite bank stocks to buy to play the economic recovery:

• JPMorgan (NYSE:JPM)
• Wells Fargo (NYSE:WFC)
• Citigroup (NYSE:C)
• Goldman Sachs (NYSE:GS)
• Bank of America (NYSE:BAC)

Bank Stocks to Buy: JPMorgan (JPM)

In the big picture, JPMorgan is the best bank on Wall Street, and JPM stock is one of the best bank stocks buy for the next 12-plus months.

Over the past few years, JPMorgan has heavily leaned into veteran leadership, unique technology partnerships and relentless fin-tech innovation to consistently drive some of the best numbers in the industry. Revenues have been ripping higher. Return on equity has been sky high. Profits have been soaring.

Head to toe, this is the highest quality bank on Wall Street. It has been for some time, and it projects to remain so for the foreseeable future.

To be sure, the valuation on JPM stock reflects this reality. Most big bank stocks trade below tangible book value today. JPM stock trades at around 1.8X tangible book value — so it is more richly valued than peers.

But that’s always been true. Better performance has led to a bigger valuation.

More importantly, relative to where the stock’s tangible book multiple was pre-Covid (up around 2.4X), JPM stock is cheap today, meaning that there is room for this stock to run higher as the U.S. economic recovery takes hold in 2021.

Wells Fargo (WFC)

Wells Fargo has been the eyesore of the banking industry for several years.

That hasn’t changed in 2020. Amid a challenging backdrop, Wells Fargo has reported a string of quarters this year that comprised big revenue declines, significant profit margin compression, record low net interest margins, significant builds in reserves and huge net losses.

It hasn’t been pretty.

But, Wells Fargo is still one of a select few major consumer banks in the U.S. That reality won’t change anytime soon. If macro U.S. economic and banking sector fundamentals improve over the next 6 to 12 months thanks to a Covid-19 vaccine being widely distributed, Wells Fargo’s numbers and growth trends will only get better.

Those improving growth trends will converge on what is a hugely discounted valuation on WFC stock today. The stock is trading at around 80% of its tangible book value, making it one of the cheapest bank stocks in the market.

This convergence will ultimately spark huge gains in WFC stock over the next 6 or so months.

Bank Stocks: Citigroup (C)

Next to Wells Fargo, Citigroup is another one of the best bank stocks to buy because of potential valuation upside as the U.S. economic outlook improves.

Citigroup stock is currently trading at around 67% tangible book value. That’s dirt cheap for a bank stock. Indeed, it’s about as cheap as you will find in this entire sector.

Such a multiple only makes sense if Citigroup’s growth trends project to meaningfully deteriorate over the next new quarters.

But they won’t. They’ll actually improve, because a highly effective Covid-19 vaccine will make the rounds in 2021, reinvigorating consumer confidence and unleashing enough pent-up consumer demand to fuel a huge economic rebound.

That big rebound will meaningfully improve Citigroup’s growth trends over the next quarters. Those improvements will set the stage for dirt-cheap C stock to rally in a big way in 2021.

My numbers suggest that Citigroup stock has upside to $65+ prices — which is, coincidentally, roughly in-line with the company’s tangible book value. That makes complete sense. In the event that the U.S. economic outlook does improve over the next several months, Citigroup stock should rebound to tangible book value.

Goldman Sachs (GS)

The bull thesis on Goldman Sachs is that this is the best bank stock to buy for continued strength in capital market activity.

Goldman Sachs isn’t a retail bank. It’s a capital markets bank. While retail banking has struggled over the past few months because consumers have lost their jobs and spending has fallen off a cliff, capital markets activity has actually burgeoned during that stretch.

Goldman’s second quarter and third quarter numbers reflect that reality.

Investment banking net revenues rose 36% year-over-year Q2, and 7% in Q3. Fixed income revenues rose 149% year-over-year in Q2, and 9% in Q3. Wealth management revenues rose 7% year-over-year in Q2, and 19% in Q3.

Goldman Sachs is actually firing on cylinders amid the pandemic because of red-hot capital markets activity.

As the U.S. economic outlook improves, already red-hot capital markets activity will only get hotter. You’ll get more IPOs. More acquisitions. More deal making in general.

All of that means Goldman Sachs will do a lot of business and make a lot of money over the next few quarters. Such robust business trends will help GS stock power higher.

Bank Stocks: Bank of America (BAC)

Last, but not least, on this list of bank stocks to buy, we have Bank of America.

Bank of America — much like Wells Fargo — has been hit hard by the Covid-19 pandemic, given the bank’s large exposure to the consumer banking sector (which has been disproportionately impacted by the virus).

This has left BAC stock trading in dirt-cheap territory. BAAC stock presently trades around 1.3X tangible book value. Before Covid-19, that multiple was close to 2X.

BAC stock could get back to a near 2X tangible book value multiple in 2021.

Vaccine-powered macroeconomic improvements will turn this bank’s entire story around. Revenue growth will turn positive. Negative operating leverage will flip into positive operating leverage. The efficiency ratio — which has been rising all year long — will get pulled lower. Pre-tax, pre-provision profits will start rising again. Net interest income will start growing again thanks to higher interest rates. Net profits will charge higher.

The whole BofA story will do a 180.

As all that happens, BAC stock should make a run towards $30.