'There's an incredible growth opportunity within the financials, particularly Bank of America, Citigroup, Discover Financial - and there are others', Whitney told "Closing Bell" . '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'.
The main catalyst comes 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, Whitney said.
Conservatively, that approval could allow BofA to quadruple its dividend, Whitney said.
(Read More: Banks Could Have Record Fourth Quarter: Bove )
Long bearish on the industry, Meredith Whitney turned more positive on the group Monday and upgraded Bank of America along with Citigroup and Discover.
Whitney is not expecting much in terms of revenue growth next year. Instead, 'those who can execute the best and be leaders and show how they can improve real profitability by right-sizing their businesses will outperform', she said.
Whitney also said in the interview that Dodd-Frank is an outside influence on bank profitability and other 'buzz kills' like Basel III, changes to proprietary trading and new credit card rules are priced into the stocks.
Bank layoffs have also only just begun, she said. 'We're still encouraging banks to get smaller, leaner and more efficient'.
She sees 35% upside for Bank of America. 'It's hard to find upside like that in any sector', she said.