It was nice while it lasted, and there is a good chance that later this summer we could resume an uptrend. However, the incredible “melt-up” rally that has been rolling along for almost three months may be ready to take a huge breather, if Thursday’s action is any guide. Mid-single-digit declines across the board may force some of the new investors that have jumped in right back to the sidelines. Many Wall Street veterans have been stunned as, into the storm of a continued COVID-19 pandemic, massive social disorder and horrible economic news, the markets had recouped almost all of the losses from the 35% sell-off from the top.

It’s not uncommon during massive downdrafts and bear markets for there to be substantial moves higher. Professional investors, and especially hedge funds, look for opportunities both ways. You can bet they have been laying the trades back on in their short books over the past couple of weeks. The good news for investors is at least all the negatives that are troubling for equities are known about now. That wasn’t the case back in mid-February.

We screened the BofA Securities research universe looking for companies that had lagged the massive tech rally and appear to be rebounding. Financials and energy caught our eye, in addition to some cyclicals that look tempting. We found five stocks that are rated Buy that make sense as we consolidate the huge rally.

Citigroup

Shares of this top bank are trading at the lowest levels since 2016. 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 7.2 times estimated 2020 earnings, this one looks very reasonable in what remains a volatile stock market.

Investors receive a 4.22% dividend. The BofA Securities price target for the shares is $57, while the Wall Street consensus target is up at $64.75. Citigroup stock closed trading Thursday at $48.39, down a stunning 13% on the day.

Exxon

This is another safer long-term play for conservative investors, and the energy giant is trading at 16-year lows. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.

Earlier this year Exxon announced plans for spending cuts amid the coronavirus outbreak that caused a price slide significantly aggravated by Saudi Arabia’s decision to start raising oil production. Exxon’s budget for this year and every year until 2025 was set at between $30 billion and $35 billion. Many on Wall Street feel that could be cut 10% to 20% or more. Note that Exxon has one of the highest paid American CEOs.

The analysts remain very positive and said this when Exxon reported:

Despite some confusion on the company’s reported earnings, we contend that on a peer to peer comparison the first quarter is a clean beat versus the street. COVID-19 is the great equalizer. All majors will lean on the balance sheets, but Exxon can reduce spending as needed with growth in the recovery. The second quarter promises more sticker shock but Exxon’s yield pays investors to wait through this downturn with growth beyond.

The company pays investors a huge 7.54% dividend, which probably will be defended. BofA Securities has an $80 price objective, but the consensus estimate is higher at $83.92. Exxon Mobil stock closed down almost 9% on Thursday to $46.18.

This is one of Wall Street’s white-glove firms, and it may be among the best buys in the banking and investment arena. Morgan Stanley (NYSE: MS) is a global investment bank with leading positions in investment banking (M&A and equity underwriting), equity trading and wealth management, which contributes nearly 50% of firmwide revenues. The firm also has an asset management business, which adds to the lower-risk business profile the firm has pursued since the financial crisis.

Earlier this year, the Wall Street investment bank agreed on a $13 billion purchase of discount brokerage E-Trade. With 5.2 million customers, it was once a revolutionary platform that “helped usher in a dramatic shift among financial services firms” and fueled the rise of indexes and exchange-traded funds, making investing vastly easier for do-it-yourself investors. The deal is still expected to close.

Its dividend yield is 3.14%. The $50 BofA Securities price target compares with the $48.71 consensus price target. Morgan Stanley stock fell over 8% Thursday to close at $44.57.

Pioneer Natural Resources

Many Wall Street analysts love this stock for a pure crude oil play. Pioneer Natural Resources Co. (NYSE: PXD) operates a modern fleet of more than 24 top performing drilling rigs throughout onshore oil and gas producing regions of the United States and Colombia. Pioneer production services are supported by 100 well-servicing rigs, more than 100 cased-hole, open-hole and offshore wireline units, and a range of advanced coiled tubing units.

Pioneer is a huge player in the Permian Basin and in the Eagle Ford in Texas, and the company owns more than 20,000 locations in the world’s second-largest oil reservoir in the Midland Basin. The company recently updated 2020 and 2021 hedging, adding $1.2 billion to cash flow estimates over next two years. It also added a new $900 million credit facility, which enhances liquidity. In addition, the Gulf coast marketing makes Pioneer less exposed to widening Midland differentials.

BofA Securities noted this after the company reported results in May:

We think Pioneer Resources has the potential to lead the industry with a disciplined model that has moderate growth capped by a defined reinvestment framework and which focuses on cash returns. Absent guidance from management our base case assumes coming out of this crisis the company adopts a growth model at half its prior levels. In our view it is a business model that Pioneers assets can support; but where it needs the support is management willing to acknowledge that the ‘old’ E&P model is broken.

BofA Securities recently raised its $111 price target to $126. The consensus target is $113.36. Pioneer Natural Resources stock most recently closed at $96.64, down just under 6% on the day.

Southwest Airlines

This company continues to expand routes, remains a low-cost leader and is one of the top airline picks across Wall Street. Southwest Airlines Inc. (NYSE: LUV) operates a passenger airline that provides scheduled air transportation services in the United States and near-international markets. It was one of the airlines with the fewest delays last year.

As of December 31, 2019, the company operated a total of 747 Boeing 737 aircraft, and it served 101 destinations in 40 states, the District of Columbia and the Commonwealth of Puerto Rico, as well as 10 near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos.

Southwest recently had a massive stock sale to raise cash and improve the balance sheet. The analysts noted this in a recent research report:

Southwest Airlines completed a $3.9 billion capital raise which brings total liquidity to $14.8 billion after all the government payroll support funds. At a cash burn of $34 million per day, the company has enough liquidity to get through the next 435 days (vs 320 days for Delta / 225 days for United). Even with a slow recovery, we expect Southwest to end 2020 with $10 billion in cash and $1.5 billion in net debt.

The company has suspended the dividend until September of 2021. BofA Securities just raised its $38 price target to $44. The consensus target is $39.63, and the last trade Thursday for Southwest Airlines stock came in at $32.83.

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Buying these top stocks is not like chasing the FANG stocks at all-time highs. These have severely lagged the rest of the “melt-up” rally winners and, while they are well off the March lows, they offer far better positioning for the second half of 2020 and even into 2021 than perhaps the overbought and very expensive momentum stocks hold.

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