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

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.