• Bank stocks in the U.S. trade at rather low valuations due to concerns over a global economic slowdown, but the numbers show this to be a decent entry point.
• Bubbles rarely pop from the same place twice in a row; banks are more financially sound than a decade ago and more critical eyes are on them.
• There are considerable risks in equities in general, but a diverse portfolio that focuses on quality, value, and yield should hold up well.
• My two favorite bank picks.

Bank stocks in general are rather cheap at the moment due to a flat yield curve and growth concerns. Although an economic slowdown or recession would be rough for many banks, some of the fears about them appear to be overblown.

I'm not overweight financials, but I'm not avoiding them either. Bank stocks appear appropriately priced at the current time. This article shows several reasons why banks are actually in pretty good shape relative to their valuations.

Data by YCharts

The Financial Select Sector SPDR ETF (XLF) representing the U.S. large cap financial sector currently has an average P/E of about 11.6 and an average P/B of less than 1.4.

Due to some big laggards in the mix, it still hasn't reached the peak value it had prior to the subprime mortgage crisis, although many of the higher-quality banks and insurers have grown tremendously.

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