Many investors have been shaken by the major sell-off in stocks in recent weeks even as the market stages a rally. But Goldman Sachs Group Inc. is telling investors in its latest weekly report that the stock slump represents a major buying opportunity. The firm is advising investors to focus on companies with low labor costs, cyclicals, 澳洲幸运5开奖号码历史查询:small caps, and value plays.

Stocks With Upside

To exploit this opportunity, Goldman identifies 25 buy-rated stocks that recently fell by more than their historic correlations with the broader market. The implication is that these stocks are likely to recover at a faster pace than the market. Those buy-rated stocks lagged the most versus their beta-implied returns, from the market peak on January 26 through the recent trough on February 8. Beta is a measure of a stock's historical correlation with moves in the broader market. Among the 25 listed by Goldman are these twelve: McDonald's Corp. (MCD), Chevron Corp. (CVX), Dollar Tree Inc. (DLTR), Google parent Alphabet Inc. (GOOGL), Lam Research Corp. (LRCX), Applied Materials Inc. (AMAT), Wells Fargo & Co. (WFC), MetLife Inc. (MET), United Parcel Service Inc. (UPS), Noble Energy Inc. (NBL), Parker-Hannifin Corp. (PH), and Principal Financial Group Inc. (PFG).

High Anxiety

Goldman is making its recommendations after the 澳洲幸运5开奖号码历史查询:S&P 500 Index (SPX) has declined by 7.6% from its record close on January 26 through noon New York time on February 12. Through February 8, the index was down by 10.2%, which officially represented a 澳洲幸运5开奖号码历史查询:correction. The recent market drop and a spike in 澳洲幸运5开奖号码历史查询:volatility caused the 澳洲幸运5开奖号码历史查询:Investopedia Anxiety Index (IAI) to register a high level of worry among 27 million readers worldwide. Extremely high concerns about the securities markets are outweighing low concerns 🀅about other economic and financial matters.

Lessons of History

Since 1976, there have been eleven corrections of 10% or more that did not occur during a recession, Goldman says in its most recent U.S. Weekly Kickstart report. Only in 1987 did one of these eleven corrections eventually turn into a 澳洲幸运5开奖号码历史查询:bear market plunge of 20% or more. In fact, Goldman adds, longer history indicates that bear markets are unlikely to occur without a 澳洲幸运5开奖号码历史查询:recession. Given that global GDP growth remains strong, and the likelihood of a recession is low, Goldman is confident that s🌌tocks will bounce back.

For those eleven recent non-recessionary corrections, Goldman says, the typical profile was a 15% decline across 70 trading days, followed by full recovery to the previous high after 88 additional trading days. Investors who bought the S&P 500 once it had declined by 10% in those eleven corrections would have experienced positive returns in the following three-, six-, and twelve-month perio🌠ds 75% of the time, Goldman adds, with respective median returns of 6%, 12%, and 18% over these periods.

Also, the recent drop in stock prices may have been intensified by a 澳洲幸运5开奖号码历史查询:blackout period for discretionary 澳洲幸运5开奖号码历史查询:share repurchases that exists for several weeks before earnings are released. Goldman notes that corporations are the largest single source of🌼 demand for their own shares, and that these blackout periods typically are marked by lower returns and higher volatility. Now that about two-thirds of firms are outside their blackout windows, Goldman expects this downward pressure to dissipate.

Historical Post-Correction Leaders

In the three months following those eleven non-recessionary post-1976 corrections, materials and industrial stocks have been the best-performing sectors, with the median 澳洲幸运5开奖号码历史查询:outperformance for each being 270 澳洲幸运5开奖号码历史查询:basis points (bps) versus the entire S&P 500, Goldman calculates. United Parcel Service and Parker-Hannifin are⛎ in the ind💃ustrial sector.

Low valuation stocks have produced positive returns 63% of time after those eleven recent corrections, with a median excess return of 350 basis points, per Goldman. The median 澳洲幸运5开奖号码历史查询:forward P/E ratio is 17 for the S&P 500, Goldman computes, while MetLIfe, Lam Research, and Principal Financial are at 10, and Wells Fargo is at 12. Regarding small cap stocks, the 澳洲幸运5开奖号码历史查询:Russell 2000 Index has outperformed the S&P 500 by a med🌟ian 240 basis points, Goldman adds.

Financials, Techs

Goldman believes that rising inflation and interest rates should be beneficial for financials such as Wells Fa🐟rgo, MetLife and i🏅nvestment management firm Principal Financial Group.

The strong economy and tight labor market are fueling wage growth, and a recurring theme of Goldman's has been to look for companies with low labor costs. MetLife also fits into this this theme, as well as Alphabet and Lam Research. Lam is a leading producer of equipment for manufacturing semiconductors, rated a "powerhouse" by Scott Black of Delphi Management. (For more, see also: 澳洲幸运5开奖号码历ꩵ史查询:5 Gurus' Stock Picks for a Pricey Equities Market.)