As a long-term investor, I’m constantly looking for opportunities to buy cheap stocks when markets are volatile. And with war in the Middle East potentially sparking a global energy crisis as oil & gas prices surge, another plunge in stock prices could be around the corner.

In fact, we’ve already started to see valuations start to slip.

The FTSE 100, FTSE 250, Nasdaq 100, and S&P 500 have all dropped roughly 3%-5% since the end of January – a trend which, if it continues, could drag the markets into correction territory. And if that happens, I’ll be looking to snap up some quality stocks at cheaper prices.

So which sectors could contain the best bargains?

Which sectors should investors watch?

Let’s assume the worst and say the supply chain disruptions of energy exports from the Gulf states continue for the foreseeable future. With an estimated 15%-20% of global oil & gas supply at risk, the danger of surging energy costs is significant, especially in the UK, where gas is the primary driver of the price of electricity.

In this scenario, quite a few sectors could be hit hard. Higher energy bills during an already problematic cost-of-living crisis don’t bode well for the consumer discretionary sector. Travel, leisure, and hospitality would likely also have to endure some pain as consumers cut back on non-critical spending.

Higher energy inflation also doesn’t help British manufacturing. And if it leads to the Bank of England hitting pause on its interest rate cutting plans, debt-heavy real estate investment trusts could also come under increased pressure.

It’s a similar story for banking, where slower economic growth, paired with higher interest rates, drastically drives down borrowing demand from both businesses and individuals alike, particularly when it comes to mortgages.

But as experienced investors know, the best time to buy is often when everyone else is panic-selling.

A potential bargain?

Out of all the sectors at risk, consumer discretionary seems like it could be among the most vulnerable to a short-term sell-off. And high-quality, premium-priced stocks like Games Workshop could be worth mulling over as a long-term investment, if a more attractive price emerges.

But there are already some potential bargains that exist today. JD Sports Fashion (LSE:JD.), for example, is repeatedly being highlighted by institutional analysts as a cheap stock to consider right now.

The sports apparel/footwear retailer has seen its stock price struggle in recent years. And even since January, the group’s market-cap has shrunk by another 12%. But with the forward price-to-earnings ratio standing at just 6.5, the common consensus among experts is that a buying opportunity may have emerged.

With both Nike and Adidas undergoing a genuine commercial revival, JD Sports’ leading brand partners are helping the group bounce back. And while sentiment remains weak, it’s worth highlighting that its latest trading update did reveal some green shoots of recovery, particularly in North America.

Of course, shifting fashion trends and a leveraged balance sheet do pose a significant threat to the business, especially if wider discretionary spending starts to slow. But with JD Sport shares already trading below even the most pessimistic share price targets, these risks may already be priced in – something for opportunistic investors to consider.