With nearly half of the month behind us, it’s easy to see that September is living up to tradition. Most of the major indexes are in the red for the first half of the month, with the Dow down over 26%, the S&P down over 11% and the Russell 2000 also down more than 11%. The tech-heavy Nasdaq is the outlier, with a 3.3% gain so far.
The holiday-driven softness is only part of the story. This year, it’s more about the ability to open up your business and stay open as footfall remains well below normal levels. That’s unless you have an online presence, because that segment has never had a better year.
So of course employment rates have been impacted and it will take a few more months for that to normalize, at the current rate of revival. That again means that many people don’t have the cash in their hands that they’d normally spend on non-essentials (or to invest with for that matter).
That’s why all hopes are pinned on another stimulus that continues to be delayed as Democrats and Republicans remain deadlocked over the terms.
But one thing we do know is that interest rates will continue to hug the floor. So vaccine or no, our best hope for gains is to play the market. That means, getting out when you’re still doing good and getting in when everyone else seems to be selling. It means you don’t beat yourself up over getting out too early and you grab every opportunity that looks cheap.
And cheap of course means value for money. It isn’t just about buying stocks that you can afford. It’s also about recognizing the stocks that you can’t afford to miss. And thanks to the September correction, there are a growing number of stocks in the latter category.
That’s what I’m attempting to pick here.
I’m starting with some semiconductor equipment makers because they’ve dropped so much in the past week that they’re looking really cheap right now-
KLA Corporation (KLAC - Free Report) offers process diagnostics and control (PDC) and yield management solutions, mainly used by semiconductor foundries but also by logic and memory makers. This stock, which has an expected growth rate of 10.1% for this year and an estimated long-term growth rate of 7.6%, dropped 14.6% over the past week.
As such, its P/S multiple has dropped to 4.55X, which is below the median level of 4.75X over the past year. Buying KLAC at these levels would be very good value for money.
An added bonus to buying this Zacks Rank #2 (Buy) company is its dividend, which yields 2.09%.
Applied Materials, Inc. (AMAT - Free Report) , which makes fabrication equipment for semiconductor, flat panel liquid crystal displays (LCDs), and solar photovoltaic (PV) cells and modules, is expected to grow its earnings 33.8% this year and 12.7% over the long term. And yet its stock was pushed down 10.5% over the past week.
As a result, this Zacks Rank #2 company is now trading at 3.01X P/S, which is below the median level of 3.29X.
AMAT’s dividend yields 1.60%.
Time to dive in.
Lam Research Corporation (LRCX - Free Report) supplies wafer fabrication equipment and services to the semiconductor industry. This Zacks Rank #1 (Strong Buy) stock offers an estimated earnings growth of 29.6% this year and 13.3% in the long term.
Its dividend yields 1.56%.
The stock is down 13.9% over the past week, taking its current P/S multiple to 3.59X, which is way below the median value of 4.07X over the past year. That’s a screaming buy!
After that group is a motley crowd from the oil, construction and industrial segments-
On the Oil & Gas E&P side of things, there’s Concho Resources Inc. (CXO - Free Report) , which has operations in the Permian Basin, where drilling is cheaper. The Zacks Rank #2 company is expected to grow earnings 34.5% this year and 11.9% in the long term.
It also pays a dividend that yields 1.77%.
CXO shares dropped 8.5% this past week, taking its P/S multiple to 2.60X. This is below the median value of 2.96X over the past year. So the stock is cheap at these levels.
Norbord Inc. (OSB - Free Report) , offering hardwood panels used in building construction, will grow earnings 1,246.8% this year and 37.3% in the long term.
Its dividend yields 2.9%.
The shares are down 5.0%, taking the P/S multiple of 1.37X between the median value of 1.10X and annual high of 1.45X, suggesting room for upside. That’s why it makes sense to buy shares of this Zacks Rank #1 company.
Superior Uniform Group, Inc. (SGC - Free Report) sells uniforms and related products for a large cross-section of organizations including hospitals and healthcare facilities, corporations, hotels, restaurants, etc, as well as industrial, transportation and commercial markets.
Earnings are expected to grow 130.4% this year and 14.0% in the long term.
The Zacks Rank #1 company pays a dividend that yields 1.79%.
The shares dropped 7.8% in the past week, taking the P/S multiple to 0.71X, which is between the median value of 0.56X and annual high of 0.91X. Given the strong growth rates, these shares are worth buying on any softness.
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