Bank stocks are poised to rocket higher, says bank analyst Dick Bove of Rafferty Capital Markets.

Valuations are one factor, he told CNBC. "The stocks are selling at premiums to book value which are so low relative to history, that there is significant opportunity for them to at least double from this level."

Bank profits are strong too, Bove said. "The first thing that should be understood is that the industry is at all-time record earnings."

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He's also impressed with bank balance sheets. "The balance sheets of these companies couldn't be better," he said.

"They've got more capital as a percentage of assets than they've had going back to 1938. Liquidity on their balance [sheets] is at 40-year highs."

Meanwhile, loan-to-deposit ratios are at 40-year lows, Bove said. "If you think of a bank balance sheet as a factory, this factory is running at around 65 to 70 percent of capacity, which means that the ability to show a significant increase in earnings from this level is enormous," he said.

"The economy apparently is going to do relatively well this year, which means that the loan volume will pick up."

Former FDIC chair Sheila Bair, now a director at Banco Santander, is more critical. The country's largest banks "are still too levered," she told Yahoo.

"Capital levels have improved since prior to the [financial] crisis, but loan-loss reserves are down significantly as banks keep releasing reserves to drive earnings. They'll tell you 'credit quality is getting better, the economy is on the upswing.' I don't know about that."

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