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These beaten up cyclicals should be bought as stocks head back to records, investor says

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These two cyclical stocks should be bought on way back to records, investor says

Stocks were rallying again on Wednesday, bringing the S&P 500's weekly gains to 4%.

Investors should use these rises as an opportunity, says Eddie Ghabour, co-owner of Key Advisors Group, a firm with $550 million assets under management.

"Short term, this gives investors that were fully invested a golden opportunity to de-risk and raise some cash, so that way they can buy the dips because I do truly believe we're going to be in this volatile environment at these 8% to 10% moves. And I think you can buy the dips right now," Ghabour told CNBC's "Trading Nation" on Tuesday.

Even with the gains this week, the S&P 500 is still down nearly 13% from its February peak. At its worst, it had fallen 35% from February to March lows. 

"We can now do a barbell approach in which you can start nibbling in the cyclical names like the JPMorgans, like the Starbucks. We've been advising clients that we will be dollar-cost averaging into these types of sectors that have been beaten up because … there are certain companies that are up pretty big here today, but there's many companies that have been truly beaten up, and they're still down 30% to 40%," said Ghabour.

Starbucks is 23% off its 52-week high, while JPMorgan has fallen 35%. Ghabour is also layering into some of the market's biggest winners including Amazon and Microsoft — Amazon is up 34% and Microsoft has risen 17% so far this year. 

Ghabour also places importance on a diversified portfolio and says investors should hedge against wild swings using cash. 

"We're telling clients that we think they should have at least a 10% to 20% cash position right now. I truly feel like sometimes investors think they need to be fully invested and cash is not talked about enough as part of an asset allocation and with so much uncertainty I think it would be crazy right now for an investor that's close to retirement to be fully invested in the equity markets," said Ghabour.

The S&P 500 was up nearly 2% on Wednesday, but remained 7% lower for the year. 

Disclosure: Ghabour and Key Advisors hold JPM, SBUX, AMZN and MSFT. 

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