FILE PHOTO: Traders work on the floor of the New York Stock Exchange, (NYSE) in New York, U.S., February 6, 2018. REUTERS/Brendan McDermid

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.

SEE ALSO: GOLDMAN SACHS: Tech stocks face a looming risk that would make them less appealing

MGM Resorts International

Ticker: MGM

Sector: Consumer Discretionary

Market cap: $19 billion

Upside to Goldman Sachs’ target: 28%

Amazon

Ticker: AMZN

Sector: Consumer Discretionary

Market cap: $691 billion

Upside to Goldman Sachs’ target: 28%

Nucor Corp.

Ticker: NUE

Sector: Materials

Market cap: $19 billion

Upside to Goldman Sachs’ target: 28%

See the rest of the story at Business Insider …read more

Source:: Business Insider

      

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