Goldman Sachs tells clients to bet on these underperforming stocks into earnings

The Wall Street Bull (The Charging Bull) is seen during Covid-19 pandemic in New York, on May 26, 2020.
Tayfun Coskun | Anadolu Agency via Getty Images

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For investors looking to play the second-quarter earnings season, this reporting cycle could be a wild card as the majority of the companies refused to provide guidance, making the disconnect between analysts estimates wider than ever.

Goldman Sachs is advising clients to focus on stocks with strong fundamentals that have underperformed the S&P 500 so far this year. That's because the S&P 500 is  coming off its best quarter in more than 20 years while earnings took a big hit from the coronavirus crisis. Winning stocks this year would need much better earnings to justify their explosive rally.