Goldman Sachs says 2023 will be the year that picking individual stocks as a strategy will return, as the grip that macroeconomic conditions have on the market eases and major benchmarks remain stuck about where they are. “Although resilient macro data has outweighed a mediocre 4Q earnings season at the start of 2023, the S & P 500 has become less macro- and more micro-driven in recent months,” wrote David Kostin, Goldman’s chief U.S. equity strategist, in a note. “In a micro-driven market a high share of the typical stock’s return is explained by company-specific factors, while a macro-driven market means the returns for the typical stock are primarily explained by factors such as beta, sector, size and valuation.” After falling 19% last year, the S & P 500 is up 6.5% to roughly 4,090 so far this year, about equal with Goldman’s year-end forecast of 4,000. Internally, Goldman calculates that the share of market returns over the last six months that were driven by micro factors has rebounded to 53%, up from 39% last June when inflation and rate-hiking fears were dominating the market. The Goldman note discusses how so-called return dispersion is increasing, which basically means stocks are starting to move independently and not together as a group. “Rising return dispersion and an increasing micro share of stock returns means more opportunity for stock pickers to capture alpha,” Kostin wrote. Capturing or delivering alpha simply means assuming more risk in the stock market by taking an active rather than passive approach to investing in an attempt to outperform the market. Where to find alpha Goldman calculated a dispersion score for each stock that looks at how much of its return is driven by company-specific factors and how volatile the stock is likely to be. The following are among the stocks Goldman calculates as having the highest dispersion scores. The firm cautions that high scores reflect “opportunity,” but not necessarily the direction. So stocks with high dispersion scores could also move independently to the downside. However, on this list below, CNBC selected the stocks where Goldman’s fundamental analysts believe there will be significant upside over the next 12 months. To be sure, Goldman says that if there’s a recession, then macroeconomic factors will take over again and stocks will start trading in large groups. “Although periods of economic distress have historically coincided with elevated levels of volatility, stock correlation should also spike as market-wide macro factors drive returns across all stocks,” the note said.