Goldman: Buy unloved stocks to beat benchmark

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Goldman Sachs is recommending fund manager clients buy the stocks that their peers are neglecting in order to beat the S&P 500 this year.

This is a similar strategy that the firm recommended to its hedge fund clients two weeks ago.

So the investment bank that many try to emulate is going all in on a contrarian theme to play this topsy-turvy stock market that is stuck in a trading range.

States the report:

"This quarter, we focus on our Goldman Sachs single-stock analysts' recommendations to identify stocks where the typical large-cap core fund and our analysts disagree. We recommend fund managers consider overweighting 'Conviction Buy' stocks the average fund currently underweights and underweighting sell-rated stocks the typical fund currently overweights."

Goldman recommends buying shares of, Bristol-Myers Squibb, Bank of America, Actavis and Starbucks because the average mutual fund has a smaller weighting in those shares than those stocks' weightings in the S&P 500. They are also loved by Goldman's individual stock analysts.

Clients should sell shares of Occidental Petroleum, Boeing, Omnicom Group, Western Union and Kohl's because the average manager owns more shares of those stocks than they should when compared to the stocks' weightings in the S&P 500.

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Goldman analyzed more than 700 mutual funds that hold $1.9 trillion under management in total. The average large-cap fund in the group is up 3.5 percent so far this year.

—With reporting by CNBC's Michael Bloom.