Best Buys During a Pullback

09/17/2015 7:00 am EST

Focus: STOCKS

Ian Wyatt

Publisher & Chief Investment Strategist, Wyatt Investment Research

Markets rarely make a V-shaped bottom. It's much more common for a market to test and retest recent lows. Investors should view a retest of the lows as a natural and healthy thing, suggests Ian Wyatt, editor of Million Dollar Portfolio.

Investors who have cash on the sidelines can look to take advantage of the volatility.

Now is a great time to buy outstanding companies at more attractive prices. As Warren Buffett would say, the time to buy stocks is when they are "on sale."

Here are some of my favorites. These are extremely high quality stocks with healthy and growing business.  And their shares are trading at healthy discounts to the recent highs.

Apple (AAPL)

Shares were recently down 16% from their recent all time high. That's more than twice the decline for the S&P 500 (SPX) (SPY).

This is a world-class company, trading at less than 10 times earnings estimates.

Bank of America (BAC)

Big banks are well positioned.  Legal expenses, fines, and settlements are largely in the rearview mirror.

This bank should increase its dividend (currently 1.3%). And profits will grow even if interest rates rise only slightly in 2016. Plus, the stock is cheap at just 10 times earnings estimates.

Berkshire Hathaway (BRK-B)

Even Warren Buffett's stock has taken a hit; its decline is completely unjustified. The Heinz-Kraft merger was a huge profit windfall and isn't reflected in this stock.

If you want to own a diversified company on the most solid financial footing, then look no further. If you're concerned about the future, this is a great stock to own.

Wells Fargo (WFC)

The story for Wells Fargo is similar to BofA; this bank is considered the highest quality and its price-earnings multiple of 12 reflects that view.

Yahoo (YHOO)

This stock has been taken down, along with Alibaba Group (BABA). If you look at a chart of the two stocks, you'll see the strong correlation between the two.

Even with China's economy slowing down, Alibaba should grow rapidly. Buying Yahoo is much more risky than the other ideas featured above. But it could also be much more rewarding.

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