On Wednesday Virtus Investment Partners' Joe Terranova bought Regions Financial and added to his Bank of America position because he thinks the bank stocks will benefit from a rising rate environment. "I think that financials have done well. The problem is they have not given you the type of performance that maybe some of the higher growth technology names have, but if you look longer term, financials have recovered," he argued on Wednesday's Halftime Report. "They have paused and then they have consolidated and refreshed."

Terranova is also looking ahead to the results from the Comprehensive Capital Analysis and Review (CCAR) -- released on June 30 -- as a potential upside catalyst for the bank stocks. Specifically, he's watching what the Federal Reserve says about dividend restrictions. "The dividend payout ratio needs to be closer to 30%. I think you're going to see that with Regions Financial. I think you're going to see that with Bank of America," he noted. The financial sector (XLF) has underperformed recently, falling nearly five percent in the past three months. But like Terranova, Morgan Stanley's Lisa Shalett believes the sector will soon turn a corner.