Financial stocks have been out of favour for some time now but some analysts believe investors should take advantage of the current low valuations and buy key stocks.

NCB Stockbrokers is recommending Irish Life & Permanent and Anglo Irish Bank as buys at the moment, while it is also positive on the outlook for AIB and Bank of Ireland. Anglo Irish Bank's share price continues to be depressed despite above average growth. And while it tends to be more cyclical than its peers, NCB believes it is significantly under valued in the market at the moment.

Irish Life & Permanent is also seen as offering good value with its growth prospects also considered good. At current levels the shares are inexpensive relative to other UK and European life assurers, according to NCB.

Commenting on the two main banks, the brokers believe AIB has a reasonably good chance of delivering benefits from its overseas strategy. Bank of Ireland is also well placed to achieve excellent earnings prospects over the next couple of years, driven by continued growth in its domestic business and the positive impact of falling corporation tax rates and share buy-backs, according to NCB.