Investing.com — HSBC told clients in a note on Thursday that the recent stock market correction looks overdone and highlighted 11 Buy-rated stocks that investors can pick up after sharp declines.
Strategist Nicole Inui noted that while the S&P 500 has traded in a range for several months, tech and industrial stocks have each fallen 8% to 9% over the past three months as the AI trade unwinds. Some sub-sectors have dropped close to 20% from their peaks despite healthy fundamentals.
“The S&P 500 index has been range-bound over the past several months, but that masks the huge rotation we are seeing beneath the surface,” Inui wrote.
Defensive sectors such as consumer staples and health care, by contrast, are trading near one-year highs and at close to five-year-high valuation premiums to the broader market.
“We believe the correction in equity markets has been overdone, especially in these oversold sub-sectors of the markets, including semis, capital goods,” the strategist said.
HSBC’s 11 picks are Alphabet (NASDAQ: GOOGL), Applied Materials (NASDAQ: AMAT), Baker Hughes (NASDAQ: BKR), Bloom Energy (NYSE: BE), Citigroup (NYSE: C), Freeport-McMoRan (NYSE: FCX), GE Vernova (NYSE: GEV), NextEra Energy (NYSE: NEE), Oracle (NYSE: ORCL), Sempra (NYSE: SRE) and Vertiv (NYSE: VRT).
The list leans heavily toward companies tied to rising electricity and data center demand. HSBC cited Bloom Energy’s on-site power technology, GE Vernova’s strong order backlog and Vertiv’s data center power and cooling equipment.
Elsewhere, HSBC highlighted Alphabet’s AI monetization potential in search and cloud, Applied Materials’ exposure to advanced chips and memory, Citigroup’s profitability recovery, and Freeport’s exposure to copper and gold prices.
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