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3 Stocks to Avoid ‘Bond Refugees’

Three early-cycle stocks offer growth potential even as the market could see additional downside, Peter Sorrentino of Huntington Asset Advisor said Wednesday.

"I think the retail public when they start to get their June statements – really across the board, 401(k) plans, you name it – I think you're going to see the next wave of selling because for a lot of those investors who thought they were in the safer investment classes, they're going to see significant declines," he said. "I mean, just look at the move in the 30-year Treasuries in just the last two months. That's going to be a religious experience."

On CNBC's "Fast Money," Sorrentino noted activity in defensive sectors and real-estate investment trusts as evidence of a large-scale move from bonds to stocks.

"We've already seen some of that migration in ownership, if you look at what's been going on with REITs and utilities," he said. "The bond refugees are on the move. And again, the retail public is probably the last one to know about it."

(Read More: 3 Sectors to Weather Rising Rates: Pro)

Sorrentino said that stocks would face rough roads due to slowing earnings growth and other factors.

"I think for equities, it gets a little tougher here for a while," he added.

An S&P 500 level of 1,590 was "a great place to jump in," Sorrentino said, revealing that he was looking to cash-covered puts as a way to improve his bottom line.

"We like the names, we just argue about the price," he said.

(Read More: S&P Has Peaked for 2013: Guy Adami)

Sorrentino identified three stocks he liked: Helmerich & Payne, Cisco and Deere.

"We think they're early cycle," he said. "We think the U.S., basically through slow growth, avoided a recession because we really didn't have any excesses to burn off. And so, we're thinking that what happens next is we essentially get a restart of an economic cycle."

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CSCO
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