Goldman Sachs reveals the 10 best stocks to buy now for a market comeback from the coronavirus-driven plunge

Reuters

• Goldman Sachs has identified 10 stocks where options prices are cheap relative to their historical relationship with the broader S&P 500.
• These stocks have the highest implied upside as stocks recover from the coronavirus-driven sell-off.
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The law of gravity also applies to financial markets - with the caveat that stocks always defy it in the long run.

Investors are getting seesawed again this week, owing to fears about the economic impact of the coronavirus outbreak that has claimed over 2,700 lives. Stocks staged a small recovery early on Wednesday following sharp retreats during the prior two days that took the S&P 500 to its lowest level since October.

As ever, the market's precise next move is unpredictable. But Goldman Sachs still wants traders to be positioned for any eventuality, including a rally that persists beyond Wednesday.

The firm's equity derivatives strategists identified 10 stocks that traders can use to profit from such a comeback. What these picks all have in common is that their options prices are cheap relative to their historical sensitivity, or beta, to the S&P 500. Their beta was calculated by comparing their weekly returns to the benchmark index's over a three-year period.

Goldman's Vishal Vivek and his colleagues further dug into the stocks' three-month implied volatilities to discover how much implied upside they have based on their sensitivities to the S&P 500.

"Following the market drawdown, we see increased potential for a move higher in these stocks, and recommend buying calls to position for higher upside volatility," Vivek said.

The stocks are listed below and ranked in ascending order of their upside to implied volatility.

Get the latest Goldman Sachs stock price here.