Fundstrat's Tom Lee says these epicenter stocks will see massive relief and lead the market in 2021

Published Tue, Dec 22 202012:55 PM EST

(This story is for CNBC Pro subscribers only.) Fundstrat Global Advisors' Tom Lee believes a group of epicenter stocks will rally sharply in 2021 on the back of a new economic expansion driven by the rollout of coronavirus vaccines. "Pent-up demand + massive relief and celebration of pandemic finale could lead to substantially stronger than expected GDP recovery," the head of research at Fundstrat, said in a note to clients. "This is what the resilience of equities in 2020 seem to suggest." Lee is touting a list of "Trifecta Epicenter" stocks in the consumer discretionary sector recommended by his firm's quantitative analyst, global portfolio strategist as well as technical analyst. Lee is one of the few on Wall Street who has been correct about the stock market's dramatic ups and downs this year. "These are the stocks that were hit the hardest by the pandemic and have the greatest operating leverage to a re-opening. And we like the earnings upside in these stocks, because of the massive cost reset," Lee said. The firm set its year-end S & P 500 target at 3,800, and it sees stocks reaching 4,300 in the second half of 2021. The 4,300 forecast represents a 16% rally from here. Lee defines the so-called "epicenter stocks" as those in industries that have been severely harmed by the coronavirus. Many of the beaten-down stocks are in the consumer discretionary sector, and Lee said their profit margins will likely outperform consensus in 2021 due to massive cost re-engineering this year. The list included many travel-related stocks including hotels MGM Resorts , Hilton Worldwide and Marriott , as well as cruise line operators Norwegian Cruise Line and Royal Caribbean. Six Flags is also expected to see outsized benefit as theme park attendance rebounds. These stocks recently came under pressure again as fears about a new variant of Covid-19 in the U.K. emerged. Still, many health experts believe that the coronavirus vaccines from Pfizer and Moderna would likely be effective against the new variant . Meanwhile, the firm also highlighted a couple retailers — Foot Locker , Gap and L Brands — as well as Autonation and Harley-Davidson in the automobile industry.

Fundstrat Global Advisors founder Tom Lee.

Scott Mlyn | CNBC

(This story is for CNBC Pro subscribers only.)

Fundstrat Global Advisors' Tom Lee believes a group of epicenter stocks will rally sharply in 2021 on the back of a new economic expansion driven by the rollout of coronavirus vaccines.

"Pent-up demand + massive relief and celebration of pandemic finale could lead to substantially stronger than expected GDP recovery," the head of research at Fundstrat, said in a note to clients. "This is what the resilience of equities in 2020 seem to suggest."

Lee is touting a list of "Trifecta Epicenter" stocks in the consumer discretionary sector recommended by his firm's quantitative analyst, global portfolio strategist as well as technical analyst. Lee is one of the few on Wall Street who has been correct about the stock market's dramatic ups and downs this year.