These 6 Stocks Are Worth Buying on the Pullback

 | Sep 15, 2020 03:45AM ET

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 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%.