Here's how to invest around the biggest jump in wage growth in 7 years

An employee sprays fiberglass over a modular boat part at the Everglades Boats manufacturing facility in Edgewater, Florida.
Ty Wright | Bloomberg | Getty Images

Friday's jobs report came in slightly worse than expected, but the big story was wage growth in October. Average hourly earnings posted a 2.8 percent annualized increase, the biggest jump in seven years.

So which stocks should investors buy or avoid as wage growth accelerates?

Fundstrat's Tom Lee recently analyzed which stocks win when wage growth is on the rise.

"Wage inflation sensitivity [is] beginning to impact stocks," the strategist wrote in a note to clients last Friday. "Stocks with low wage sensitivity outperformed ... since May."

Fundstrat's wage sensitivity methodology is to rank companies by the market value per employee ratio. He found that companies with the lowest number of employees relative to their size perform the best in the stock market during environments of wage inflation.

Stocks like Facebook and others with low labor intensity do the best, according to Lee's analysis.

On the flip side, companies like supermarket chain Kroger and Darden Restaurants do poorly as their bottom lines will take the biggest hit because they will need to pay their large workforce more money, according to Lee.

According to a screen using hedge fund analytics tool Kensho, consumer discretionary stocks performed the worst during quarters where wage growth is one standard deviation higher than trend.

The findings match Fundstrat's analysis as retail chains such as Bed Bath & Beyond and Home Depot with high labor intensity in their businesses fared the worst.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.