Company Focus 7/30/2009 12:01 AM ET
17 cheap stocks to buy on a pullback
Lots of people are still sitting on the sidelines, cautiously waiting for more signs that the market's move up
wasn't a fluke. Preparing to pounce might be a better plan.
By Michael Brush, MSN Money
It's been a sticky summer for market bears. Stocks are making them sweat about missing out -- by rising 11%
since July 10, and 4% last week alone, with a convincingly large volume of shares changing hands.
Optimistic bulls are cheering the sheer number of surprisingly good profit reports, while pessimistic bears
complain that those sunny numbers are merely the result of cost-cutting. They're stubbornly sticking to the
sidelines, waiting for more signs that the recession is at an end.
That's a risky strategy. In the summer of 1982, near the end of the last recession billed as "the worst one since
the Great Depression," the market put in an enormous 45% move off the bottom. Bears didn't concede until the
next summer that the recession had ended. By then, they'd missed out. The market had advanced 75% from
Taking a lesson from that experience, Wells Fargo market strategist James Paulsen cautions against "waiting
too long before returning to the stock market." Instead, it makes sense right now for long-term investors to buy
stocks on the pullbacks that inevitably follow a big rally. "We expect investors will be seeking market dips to put
money to work, thus we expect market pullbacks over the next few weeks to be short and shallow," says
Davidson market strategist Fred Dickson.
What to buy? Value stocks that look cheap based on ratios that compare share price to earnings to sales or to
book value, because they may offer more upside in any economic recovery ahead. Real value, not a low stock
price, is what makes a good cheap stock. Here are 17 to consider if pullbacks take their prices back toward