Sam Stovall Likes Alcoa, BofA, Goodyear And Coach (AA, BAC, GT, COH)

Standard & Poor's chief investment strategist Sam Stovall thinks that, judging by history, the market may be ready to rally. Since 1945 the market has undergone 17 corrections with an average decline of 13.7%. The recently completed six-week decline in the S&P 500 was a dead-on match at 13.7%. It's still too early to tell if the correction is over. Previous selloffs took an average of eight months to bottom out and get back to even. The S&P 500 is currently trading around 13 times estimated earnings per share of $84 for 2010 and 11.5 times the $95 EPS projection for 2011. Thus, the market is not overvalued by any means. Also, inflation and interest rates are low, which is very favorable for equities historically. Stovall believes that should a rally happen, the sectors that fell hardest during the decline may lead the way out. To find some beaten-up stocks Stovall looked for companies that fell more than the S&P's 13.7% decline during the six-week correction and looked for a 60-month beta that was greater than the overall market's. Finally, he looked at S&P analyst star ratings to come away with 14 industries that could be poised for a spring higher. Stovall then picked the top ranking stock in each sub industry. The names he found were Alcoa AA, Bank of America BAC, Goodyear Tire and Rubber GT and Coach COH.