Finally, after what seems like an eternity, we are seeing some selling, and much to the dismay of those who got in late, it’s high time. Trading at a bloated 18 times estimated forward earnings, the S&P 500 by any and all measures is expensive. With that in mind, we also may be on the verge of the best economic run in a generation, and as long as interest rates don’t blow through the roof, 2018 should still be a positive year.

While it’s quite possible we could see another leg down in the S&P 500, the selling is positive in removing some of the overbought conditions that exist. Michael Hartnett, the chief investment strategist at Merrill Lynch, sees the reversal going to 2,686 on the venerable index, and a steeper drop to the 200-day moving average at 2,530 also isn’t out of the question.

Despite the gloom, investors with some dry powder, which we have advised raising for some time, could snap up some incredible bargains. We screened the Merrill Lynch research universe for companies that are rated Buy, posted solid fourth-quarter results, gave positive guidance and do well in a rising interest rate environment. We found five that look like solid plays.

Citigroup

This stock has broken out of a long trading range, and financials often do very well rates go higher. Citigroup Inc. (NYSE: C) has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. It provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.

Trading at a still very cheap 10 times estimated 2018 earnings, the bank looks very reasonable in what has become a pricey stock market. A continuing stock buyback program is a big positive.

Merrill Lynch noted that the bank reported a “clean” fourth-quarter earnings per share that were better than expected. Revenues beat as well in the Institutional Clients Group and Global Consumer Banking. Trading was also better than feared. Feedback indicated more negative positioning into the quarter, which could drive stock higher.

Citigroup investors are paid a 1.6% dividend. The Merrill Lynch price target for the stock is $84. The Wall Street consensus price objective is $83.41. Shares closed Friday at 77.02, down almost 3% on the day.

Goldman Sachs

This stock trades at a very reasonable 11.6 times Merrill Lynch’s estimated 2018 earnings, and it is another solid financial to add when the dust settles. Goldman Sachs Group Inc. (NYSE: GS) has a gigantic institutional equity, debt and derivatives business, an ultra-high net worth clientele, top investment banking and capital markets expertise.

Goldman Sachs, which is on the Merrill Lynch US 1 list, posted fourth-quarter results that beat analyst expectations. The bank continues to be a dominant force around the world and is one of the most sought after in the world. And it is one of the very few that dictate who can be a client at the firm.

Goldman Sachs shareholders are paid a 1.11% dividend. Merrill Lynch has a $300 price objective, and the posted consensus target price is $266.76. Shares closed Friday down almost 4.5% to $260.04.

Costco Wholesale

This has become the ultimate destination for the American consumer regardless of the economy, and consumer discretionary stocks do well as rates go up. Costco Wholesale Corp. (NASDAQ: COST) has a unique business model. It operates membership warehouses and the company buys the majority of its merchandise directly from manufacturers, essentially cutting out the middleman. Costco sells in bulk but also at a lower price, thus fueling its rapid growth. With consumers having more free cash to spend with gasoline prices still low, this major retailer may continue to see large revenue gains.

Costco remains one of the few conventional retailers where metrics like store traffic, market share gains and a validated model that could bode well in international growth and expansion. The company is largely unharmed by e-commerce, and it continues to add stores in strategically mapped out locations.

Wall Street loves the company’s pricing authority on key items and the leading merchandising offerings, and the company’s relatively new Costco co-branded card with Visa is a real positive. Add in the company’s growing online presence, and the future looks bright.

Costco shareholders are paid a 1.2% dividend. The $230 Merrill Lynch price target compares with a consensus price objective of $208.28. The shares closed Friday at $190.99, down 2.5%.

Home Depot

This remains the undisputed leader in the home improvement retail category. Home Depot Inc. (NYSE: HD) is the world’s largest home improvement specialty retailer, with 2,270 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.

Home Depot stores sell various building materials, home improvement products, and lawn and garden products, as well as provide installation, home maintenance and professional service programs to do-it-yourself (DIY), do-it-for-me (DIFM) and professional customers.

The company posted huge third-quarter results with same-store sales that blew past Wall Street estimates, boosted by repairs after devastating hurricanes and wildfires. Revenue from hurricanes Harvey and Irma added roughly $282 million to the sales total for the third quarter. As the number of customer transactions increased, shoppers on average have also been spending more across Home Depot stores.

Shareholders are paid a 1.85% dividend. Merrill Lynch has set its price target at $219. The consensus price objective is s$207.90, and shares closed Friday at $193.97, down almost 3%.

Allstate

Insurance companies also tend to do well as rates rise, and this industry giant may be an outstanding pick for investors. Allstate Corp. (NYSE: ALL) is the largest publicly traded personal lines insurance company, with about 12% of the personal lines market (one in eight households). Allstate is primarily a direct writer. Besides a full array of personal lines P/C products (preferred, standard and nonstandard auto insurance, and homeowners’ insurance), the company also offers life insurance and annuity products.

While the company has seen earnings hurt by the huge number of claims from the natural disasters that hit the United States in 2017, most of those figures are already factored into future estimates for the company.

Shareholders are paid a 1.51% dividend. The Merrill Lynch price objective for the shares is $116. The consensus target price is $108.47, and the stock closed Friday at $97.94, down less than 1%.

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There is a good chance the selling isn’t over, so it makes sense to watch how stocks trade on Monday and see if more sellers do indeed come in. But when things look to be washed out, all these companies make outstanding additions to growth portfolios.

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