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Meredith Whitney Likes Banks. Should You?

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Are banks the new black?

Recent returns indicate yes, as the sector racked up its biggest profit year-to-date since 2003, dragging the overall S&P 500 index with it.

Star analyst Meredith Whitney believes it’s no fluke, and will continue into 2013, telling CNBC on Tuesday that Bank of America (BAC) and others are poised to post double-digit gains in the year ahead.

“There’s an incredible growth opportunity within the financials, particularly Bank of America, Citigroup (C), Discover (DFS)-and there are others,” Whitney told the network. “I think the underlying support is housing is close to bottom, so that is a great headwind relief for banks … They’ve come a long way.”

She said the main catalyst would come in March when the Federal Reserve is expected to approve banks’ plans to return more capital to shareholders through dividends and stock buybacks in March.

Conservatively, that approval could allow BofA to quadruple its dividend, Whitney told CNBC.

As the network notes, Whitney has long been bearish on the industry, but turned more positive on the group Monday and upgraded Bank of America along with Citigroup and Discover.

She sees 45% upside for Bank of America alone.

“It’s hard to find upside like that in any sector,” she said.

Of course, she’s been wrong before, famously predicting a massive wave of municipal defaults in 2011 that never occurred. Whitney first rose to fame with her accurate call on Citigroup in 2007, a precursor to the banking and credit crisis.