It's time to buy retail stocks and financials, Credit Suisse says

Credit Suisse is bullish on cyclical stocks, and retail and financials are two of its favorite spaces.

Retail and financial equities are part of a broader group of cyclical stocks Credit Suisse is overweight, which also includes transports, technology hardware and communications equipment. These groups have "deeply attractive" valuations and most of them outperform during times of tepid global economic growth, the bank's chief U.S. equity strategist said Tuesday.

The bank recently upgraded retail on the view that it is one of the cheapest groups in both the small and large cap spaces. Corporate earnings revisions for these stocks are also looking brighter, Credit Suisse's Lori Calvasina told CNBC's "Squawk Box."

"In the first half of the year, numbers were coming down. Sentiment around earnings was very lousy for this group," she said. "Something's actually changed over the last month. You basically hit critical lows and you're starting to bounce a little bit."

Banks are similarly "super cheap" and experiencing an earnings revision uptick, Calvasina said. Credit Suisse thinks all the bad news for the group is baked into stock prices and estimates for these equities are conservative even if the Federal Reserve doesn't raise interest rates, which would bolster banks' deposit-based businesses.

Financials, excluding real estate investment trusts, or REITs, are also poised to attract money that is flowing out of defensive dividend-yielding stocks, which have grown pricey as investors sought safe income-generating assets in a low-interest rate environment, according to Calvasina.

"I think as money rotates out of … these expensive dividend yield plays — things like staples, utilities, REITs — I think it's going to have to find a home somewhere. There aren't a lot of places to go," she said.

Calvasina said utilities stocks in particular are "unbelievably overvalued."