Stocks that have gotten clobbered during the volatile 2018 cycle are the ones most likely to lead the market next year, according to Goldman Sachs.
The group specifically contains companies that will have the highest rate of return compared with their risk. Such stocks have badly underperformed the market this year, but Goldman's strategists say history has shown that this group will take the lead in what is likely expected to be a market with muted returns in 2019.
"Looking into 2019, we expect a continued environment of low risk-adjusted US equity returns," David Kostin, the bank's chief U.S. equity strategist, said in a note to clients. The firm sees "a combination of modest absolute returns to the S&P 500 and elevated risk."
Investors should be looking for "companies best-positioned to withstand late-cycle pressures," he added.