Thomson Reuters
When stocks trade too similarly, it’s tougher for stock pickers to profit from unique opportunities.
The average three-month stock correlation on the S&P 500, a gauge of how uniformly stocks on the index trade, jumped from 9% in January to 52% last week. That was the largest and fastest increase outside of 1987, according to David Kostin, Goldman Sachs' chief US equity strategist.
But there’s some good news for stock pickers: Kostin expects correlations to fall, as regulation on tech companies and other policy risks create more individualized opportunities.
"We expect correlations for these stocks would likely revert to historical averages and present potential buying opportunities given their underperformance since March," Kostin said.
The list below highlights 21 buy-rated stocks that Kostin says are more likely to have heightened responses to individual news and offer the best opportunities for stock pickers to beat their benchmarks.
"Consumer Discretionary and Health Care currently offer the best stock-picking opportunities," Kostin said.
MGM Resorts InternationalMarkets InsiderTicker: MGM
Sector: Consumer Discretionary
Market cap: $19 billion
Upside to Goldman Sachs' target: 28%
AmazonMarkets Insider
Ticker: AMZN
Sector: Consumer Discretionary
Market cap: $691 billion
Upside to Goldman Sachs' target: 28%
Nucor Corp.Markets Insider
Ticker: NUE
Sector: Materials
Market cap: $19 billion
Upside to Goldman Sachs' target: 28%
Freeport-McMoRanMarkets Insider
Ticker: FCX
Sector: Materials
Market cap: $26 billion
Upside to Goldman Sachs' target: 28%
MylanMarkets Insider
Ticker: MYL
Sector: Healthcare
Market cap: $21 billion
Upside to Goldman Sachs' target: 29%
See the rest of the story at Business Insider
See Also:
- These 13 stocks will see explosive sales growth that will help them crush earnings season, Goldman Sachs says
- BANK OF AMERICA: A wildly successful stock-trading strategy is no longer working — and it signals that a bubble has burst
- ALBERT EDWARDS: The market is overlooking an 'extreme' situation that could spell doom for stocks
SEE ALSO: GOLDMAN SACHS: Tech stocks face a looming risk that would make them less appealing
