Market Correction Here? These Stocks Are Worth Holding

Key Points

• After a 5% pullback from the highs in the S&P 500 index, investors might want to consider a potential hedge against a further correction.
• Three stocks stand out to offer safety and upside potential to remedy the potential effects of this correction.
• Wall Street analysts and other fundamental factors indicate a potential double-digit upside.

The market’s machine is all connected to one simple theme: the level of volatility in the current environment. When volatility is on the rise, fear starts to spread across participants, from individual investors to systematic funds that rely on algorithms to shift and balance their positions. When volatility is rising, even the machines know it’s time to cut back on stocks and seek safety.

That is why during today’s potential market correction, which has started to make its way in the S&P 500 after a decline of just over 6% from the all-time highs made in February 2025, there are signs of institutional capital looking for safer places to guard their money in the markets, as seen in the iShares S&P 500 Value ETF NYSEARCA: IVE outperforming the broader S&P 500 by as much as 1.5% over the past trading week alone.

Still, there are plenty of individual stocks to be picked in this value and growth preference from the markets, which is where today’s list comes into play for investors looking for that same setup. Names like Cleveland-Cliffs Inc. NYSE: CLF in the basic materials sector, ASML Holding NASDAQ: ASML in the technology space, and even Rocket Companies Inc. NYSE: RKT in the financial sector all offer similar setups to help investors escape this potential market correction today.

Cleveland-Cliffs Stock: A Safter Double-Digit Upside

Shares of Cleveland-Cliffs are now trading at 47% of their 52-week high, which offers a much better risk-to-reward setup for investors to consider today moving forward. As the stock goes this low compared to its highs, it becomes evident that some of the worst-case scenarios might already be priced in for the company’s underlying trends.

More than that, investors have access to a low-risk setup in Cleveland-Cliffs and double-digit upside. Wall Street analysts see a consensus price target of up to $16.5 a share today, implying a net rally of as much as 52.8% from where the stock trades.

But, investors still need a fundamental reason to get behind the idea of buying into this potential upside. The current Wall Street earnings per share (EPS) forecasts expect Cleveland-Cliffs stock to deliver $0.05 in EPS by the fourth quarter of 2025, significantly better than today’s net loss of $0.68 per share.

There’s also a recent shift in the manufacturing sector for the United States economy, as seen in the latest surprise expansion in the manufacturing PMI index readings, which shows investors where the pick-up in economic activity might land next.

Short Sellers Say No More For ASML Stock

After a recent scare of a risk-off attitude in the market, shares of NVIDIA Co. NASDAQ: NVDA were the ones punished first, but that doesn’t necessarily mean that every single company exposed to chipmaking is going to encounter a similar fate. This is where shares of ASML come into play, especially as short sellers realize that the downside has been capped.

Because the stock now trades at 66% of its 52-week high, there seem to be no concrete bearish scenarios that could take it further into new lows, leaving investors with a fantastic risk-to-reward setup moving forward. The upside can now be discussed by understanding where the odds fall for ASML stock.

As of February 2025, the Wall Street consensus price target on ASML stock stands at $937 per share, calling for as much as 32.2% upside from where the stock trades today. However, those from J.P. Morgan Chase decided to shoot a bit higher to a valuation of up to $1,100 for an implied rally of 55.2%.

When it comes to the race for artificial intelligence and chipmaking to support its development, investors can see how the risk-to-reward ratio favors ASML over other names in this race.

Lower Rates Could Boost Mortgage Activity

When it comes to market corrections, one thing always remains true: Capital tends to flow into a flight-to-safety mode, favoring bonds or currency. From that reaction, interest rates typically come down to ease the environment for stocks and the economy to move forward.

When this happens, mortgage rates come down as well, which is where the upside can go now for shares of Rocket Companies. Considering that the mortgage market index is still hovering around a 1996 low today, a demand shock could suddenly spike earnings and activity for this company moving forward.

That’s exactly where the premiums in Rocket stock are justified, considering the company now trades at a price-to-book (P/B) ratio of 3.4x today, nearly three times as much as the mortgage industry’s 1.8x valuation today. Some would call this expensive and be wary of buying it. However, seasoned investors will reiterate that markets always overpay for stocks they believe can outperform.