With the S&P 500 down 13% so far this year, the market has been terrible. But most people are suffering so much from the middle class squeeze that they lack the discretionary cash to invest in stocks. For those who do have cash on the sidelines, there is a strategy they might consider that could yield big profits in the future: sift the downtrodden industries for survivors and buy their stocks as their prices fall.

The best opportunities for this strategy are in banking, home building, automobile and oil refining stocks. I would look for companies whose stock prices have been beaten down the most but that are not likely to file for bankruptcy.

How should investors evaluate whether a company in a suffering industry is likely to avoid bankruptcy? One way is to analyze all the companies in the industry based on how much money they need to pay back over the next several years and compare that figure to the amount of cash they have on hand now and whether that cash is likely to rise or fall over the next few years.

Firms that appear to have the most potential cash available to repay their obligations are the ones most likely to survive. There is more pain ahead for each of these industries, but at some point in the future, they are likely to come back. The challenge is to buy at the bottom, and the bottom is impossible to predict. Therefore, one strategy is to start buying now and if the stocks fall further, buy more to achieve a lower cost basis.

If you're interested in specific names, please comment below.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.