One thing that Wall Street has learned over the years is that for all of their so-called edge in the markets, hedge funds tend to be copycat vehicles. When they sense that their competition is going in a certain direction, they tend to head down the same path. Tom Lee, the equity strategist at J.P. Morgan, thinks that the January sell-off was in large part a function of massive hedge fund and mutual fund manager selling. He also says that January being down in a bull market is unimportant. Sure didn’t feel that way just a short while ago.

The J.P. Morgan team now believes that hedge funds have de-risked sufficiently. This, coupled with the fact that mutual fund managers appear to be working with lower-than-typical beta, suggests that there is ample firepower to lift equities at the proper juncture. In other words, when they feel comfortable that macro issues have settled down, they may be big buyers. In regards to the years the market is down in January, the analysts point out that since 1901, after a down January (while in a bull market), markets have gained from February 1 until the end of the year 81% of the time. The market has averaged a 14% gain during those years.

The J.P. Morgan team has picked 20 names to buy, many of which are from the worst performing industries and sectors year to date. We have selected eight large cap names that have the greatest upside to their price targets and listed them from the highest down.

Diamond Offshore Drilling Inc. (NYSE: DO) is the ultimate contrarian play, as the offshore drillers have been hammered since late last year. The company posted outstanding earnings and oil prices have held firm, and they are expected to stay that way the rest of this year. Diamond Offshore provides offshore drilling services in the floater market, such as ultra-deepwater, deepwater and mid-water, as well as in the non-floater and jack-up markets. The company operates a fleet of 44 offshore drilling rigs, consisting of 32 semisubmersibles, seven jack-ups and five dynamically positioned drillships, of which four are under construction. Investors are paid a 1% dividend. The J.P. Morgan price target is $68. The Thomson/First Call estimate is $52.87. Diamond closed Friday at $46.07. A move to the target would be a 45% gain for shareholders.

Ensco PLC (NYSE: ESV) is another top energy name that fits the bill. The company recently took delivery of ENSCO 121, the second of four ultra-premium harsh environment jackup rigs in its ENSCO 120 series. ENSCO 121 is an enhanced version of Keppel’s proprietary KFELS Super A Class design. The rig has been contracted in the North Sea at a day rate of approximately $230,000. Shareholders are paid an outstanding 6% dividend. The J.P. Morgan price target stands at $66, and the consensus target is lower at $59.10. Ensco closed Friday at $50.45. Trading to the target would be a more than 30% gain.

Freeport-McMoran Copper & Gold Inc. (NYSE: FCX) has been battered as investors have fled mining companies, and it sure fits the J.P. Morgan contrarian theme. The company is planning to enter the U.S. oil and gas space, which could truly make it a powerhouse. While the company reported weak fourth-quarter warnings, many analysts on Wall Street see the worst behind the company. Investors are paid a solid 3.9% dividend. J.P. Morgan has a $41 price target for the stock, and the consensus target is $39.75. The stock closed Friday at $32.35. A move to the target would be a 30% gain for investors.

Dollar Tree Inc. (NASDAQ: DLTR) has underperformed its rivals in the discount space, and J.P. Morgan sees a turnaround coming. The company has more than 4,700 stores in the United States and almost another 180 in Canada. It expands its square footage through new locations and tries to increase sales in existing stores in order to grow. With metrics bottoming and its core clientele improving along with the economy, the stock has good potential. The J.P. Morgan price target is $61, and the consensus is $60.73. The stock closed Friday at $51.39. A move up to the target would be a solid 20% gain.

MetLife Inc. (NYSE: MET) is a top insurance and financial name to buy for the rest of the year. The company provides insurance, annuities and employee benefit programs in the United States, Japan, Latin America, the Middle East, Asia and Europe. With a familiar brand and solid revenue growth, the company may be a solid name for any portfolio. Investors are paid a 2.2% dividend. The J.P. Morgan price objective $58, and the consensus estimate is $59.89. MetLife closed Friday at $49.11, so hitting the target is a 20% gain for shareholders.

Danaher Corp. (NYSE: DHR) reported earnings of $0.96 per share in the fourth-quarter 2013, which beat the consensus estimates by a penny. The results increased 10.3% compared to the earnings of $0.87 a share reported in the prior-year period. The healthy increase in earnings was mainly attributable to core revenue growth and better margin expansion. Specific initiatives for new product development and increased investment were the other positives for the company. Investors are paid a tiny 0.1% dividend. The J.P. Morgan price target is $85, and the consensus target is $84.25. Danaher closed Friday at $75.12. A move to the target would be close to a 17% gain.

Nucor Corp. (NYSE: NUE) continues the contrarian theme as the steel industry has struggled. Improving economic conditions and an increase in commercial construction could change that fast. Nucor has successfully maintained a low-cost structure with the use of electric furnaces. As a result, Nucor has posted annual profits consistently since posting a loss in 2009. Investors are paid a very respectable 3.1% dividend. The J.P. Morgan target is $55, while the consensus target is $54.88. The stock closed Friday at $48.45. Hitting the target would be a 16% gain.

Tractor Supply Co. (NASDAQ: TSCO) is a Wall Street favorite, and the J.P. Morgan team agrees. The company has consistently grown sales on both the store level and overall for more than four years now. Though it is an old-school brick-and-mortar retailer, the company is in a solid growth phase. And the market reflects it, with a more than 20 times forward earnings multiple. Investors are paid a small 0.8% dividend. The J.P. Morgan price objective is $74, and the consensus has a $75.76 handle. The stock closed Friday at $66.52. Hitting the target is a 15% gain.

J.P. Morgan has presented a list of stocks that offer true value and a non-momentum stock bias. That makes solid sense for investors looking to add some equity exposure, but still a little gun-shy from the almost 6% sell-off. While things looked to have settled down for now, a return to the heavy selling could always rear its head. Scaling in capital and looking at more contrarian names is a good strategy for now.

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