3 Stocks You'll Wish You Bought on This Dip (One Just Got a Major Catalyst)

Dips don't last forever, and these three names are sure to rebound soon. Joining us today is 60-year [music] Wall Street veteran Mark Chaken with a look at three incredibly strong stocks that are on a pullback right now. Mark, I'm really excited about these three stocks today because the charts look really great and their earnings also looked great, too. So, we're going to dive into those three names in a minute. But before we talk about the specific names, I I want to start out with kind of the state of the overall market, especially the AI trade heading into September. >> Well, what we have is a typical September. uh a little bit of a pullback in the last uh 2 to 3 weeks in all of the big averages including the S&P which has pulled back in a sideways correction to its 21-day uh average which means that we're in a position where we either break lower into the um the sort of fabled September October dip which in the um midterm election year is actually the best buying opportunity of the whole fouryear year presidential cycle. So, we've been primed for a buying opportunity and we've primed our subscribers since the beginning of the year. That's been part of our roadmap for 2026. So, now what we're seeing though is some stocks that have um fallen back after reporting terrific earnings. And the reason is that expectations were so high heading into the July uh earning season and then spilling over into some of the late reporters in August. And I'm now looking at buying opportunities in some of these stocks that I'm going to call fallen angels. And the reason I say that is that these are companies with fantastic earnings reports, but the market is starting to nitpick the uh the notes and the balance sheets. And I'll explain uh why that's important here in terms of what makes these companies a buying opportunity. Yeah, I think when we hear that September pullback, it is something we've been talking about for months or really this whole year because of that midterm election and also just the the seasonality of that September pullback in August. Some people were questioning whether we'd see a pullback because we really saw the market rally quite a bit, especially in early August. Why do you think we saw that rally? And do you think that that theory that some said maybe we'll miss the September pullback this year uh could have some merit to it or do you see that that potential for an even further pullback from where we are today? >> Well, I see the potential for a further pullback and the reason is uh three-fold. Oil, oil, and oil. Energy prices just keep going up. uh every time there's a bombing incident, we had one uh on Sunday night in Yemen uh where the Houthis uh are you know getting uh aggressive again bombing Saudi refining capabilities and the US uh and Iran exchanging fire. So energy prices have been persistently high. They're heading close to triple digits again. and the um the feeders, you know, down the line, the refined products have never really budged. They've stayed high. So, I think what that means for the stock market is it's going to be hard for rallies to get any footing here. And any bit of bad news, whether it comes from the Fed or whether it comes from Washington or whether it comes from Iran, is uh hitting the market at a vulnerable time on the calendar. And the calendar has been pretty darn reliable. If you look back over a hundred years in uh midterm election years, uh there's a late September, early October low and from there you typically once you clear the election hurdles, you have a really strong market for the next uh 9 to 18 months. So that's what I think we have in store for us. The question is what do you buy down here? >> Yes, and that is exactly what we are going to get into today. We have three different names that you are looking at as a buy right now during the September pullback. I know you also have another list of your favorite AI stocks to buy and some to stay away from too in a very recent special report you did. And if you want free access to Mark's list of his top AI buys in the September pullback and the names to also stay away from in the AI trade right now, scan the QR code or click the link in the description. This is a totally free offer this month. Mark is being very generous and giving away even more of his stock picks. So, if you want to hear more from Mark and the the stocks that are his priority this September, make sure to take advantage of that free special offer today. You just have to go to the link in the description and you can access that right away. All right, Mark, let's get into this list today. We have three names to cover. What is the first stock that you are looking at as a buy during the September pullback? >> Well, the first stock is Fabernet. The symbol is FN. And I'm doing something here that uh is a little bit away from our what we call our basic strategy. So you know our we're going to be in Las Vegas at our annual conference. So we got to thinking about what analogies there were between a very disciplined way to play let's say blackjack and a disciplined way to play the market. And in essence, we have a basic strategy at Jaken. Bullish power gauge in an uptrend outperforming the market in a strong industry group and that has served us well and you and I have talked about that on the air many many times. Today we're going to be looking at a slightly different strategy and it's based on what happened in response to earnings in August for three companies. So the first one is Fabernet. Fabernet provides a sort of connective tissue for data center buildouts. Uh we're looking at a company that reported fantastic earnings and they they provide the optic the optical uh packages that move the data around in the data centers faster. So they reported terrific earnings, beat estimates by over 10%, guided higher, believe it or not, but people started nitpicking their balance sheet. And the interesting thing is that the reason that Wall Street got down on the stock is because they're spending money to get ready for data center buildouts. So they're spending a little more cash than normal. they are borrowing a bit from their short-term lines of credit and for whatever reason that's what people decided to focus on. So here we have a stock that in taken has a neutral plus rating. What that means is the underlying fundamentals are very strong, but the stock is in a downtrend. And normally that's something I leave to my associate Pete Carmino cuz he is really good at finding these uh fallen angels, as I'll call them. But in this case, this is too compelling. Here's a stock that was trading at over 700 in May and bottomed out around 380 last week. So, I believe you're buying the stock at a discount. Uh analysts have I won't say lost their their footing on this one, but they're just uh a little too cautious. They weren't cautious going into the top, which is interesting. So, uh it's in a strong industry, which is the electronic equipment instrumentation, and that's a very key part of the whole AI buildout. So, first up is Fabernet, symbol FN. It's bounced a bit from that low last week and I think there'll be plenty of opportunity to buy the stock in here. Uh again, recognizing that we're deviating from our basic strategy here. >> Yeah. A couple of follow-up questions on this one. One that you pointed out about their earnings that a lot of Wall Street's concern was that they're borrowing money to build more because the demand is absolutely there. And so I wonder if you have any thoughts about um whether that is a sign that maybe there is more fear about that AI bubble happening. I know we we talk all of the time in the AI buildout story that there's always this kind of push back to borrowing money and the amount of spend going into building these data centers. Does that tell you anything or for you? Is there really no fear that companies like Fabernet who are the ones doing the building are providing the goods that are building these data centers? I mean the buildout is still happening. Could anything stop that from happening? >> Uh, well, yeah, I guess if the Chinese were to come up with a magical uh open-source LLM. Yeah. And there's a lot of talk about that. But when you look at the big hyperscalers uh Amazon and uh Alphabet and the like uh and then you know the specialized players uh coreweave and so forth they're they're non-stop building to accommodate the AI boom and the more I hear these anecdotal stories about people who are doing their tax returns with clawude or filing their expense reports uh which is something that as you know is is pretty painful if you travel a lot for business. You realize that AI is just in its early stages and we need the buildout. So, uh I'm not concerned about the AI buildout falling off a cliff. What I am looking to do is take advantage of these uh stocks where Wall Street has just become very picky. And I'll say that they were Wall Street was overly optimistic heading into the the peak and these earnings reports. And now I think they're being overly pessimistic about and and by the way, Fabernet is not borrowing a ton of money. They're basically spending their free cash flow, which is what you would expect a company that sees a big opportunity ahead of themselves to do. So, so uh I'm I'm not concerned. >> It's great to hear your take as somebody who's been through the market a lot. They've seen the ups and downs of of many different new waves of technology. to know that you see this continuing and not concerned about a slowdown here. I think that a sentiment we hear from a lot of analysts on the show is that while there's a lot of talk about these fears, the story isn't playing out that way. That that the real numbers, the real demand, the real spend happening um is showing that companies like Fabernet are continuing to see their earnings grow because of that rising demand. uh even givingven that really great earnings. The other question I have for Fabernet here is could we see some more volatility? Especially given that historical slowdown in September, are we at a bottom? Could that bottom go even lower? I think when people are looking to buy the dip, that's always the question of have we hit that bottom? And I know you really need a crystal ball to know that for sure, but what's your take on that? Well, we've just had a really nice bounce from the the uh deep oversold that we saw as late as Thursday last week where where the stock traded uh down around 380 and we're trading at uh 424 this morning up 4%. So, uh I think there'll be some opportunity to buy this uh as it pulls back just a bit, but I think the bottom is in on a number of these stocks because the selling was so dramatic. And by the way, insiders are buying uh Fabernet. So there you have another vote favor of uh their strategy. And the the debt that they've taken on is not showing up on the balance sheet because it's short-term debt. So the long-term debt is almost nil in this company. And uh just I love where they are. It's a nice midcap stock. So you're not paying you're not playing with the big boys here. you're playing with the the feeders basically who are benefiting from this AI uh data center buildout and you don't see these names in the press every day which is what I another thing I like about them. >> Yeah, absolutely. These aren't the ones that are making the biggest headlines and yet they are seeing a huge demand from the AI buildout. So I think it's a great one. The second stock on your list is a very similar looking chart and a similar industry. Let's get on to that second buy the dip opportunity right now in September >> and that would be Diccom Industries. The symbol is DY and again uh this is more of a a builder. They provide specialty contracting services for the digital uh infrastructure and telecommunications industry. So again essential to the AI buildout uh similar uh market cap 10 billion $9 billion market cap fairly low PE again after reporting uh better than a 10% uh beat in terms of earnings estimates and yet it was definitely a sell the news event. So uh very similar story to Fabernet company is doing all the right things and Wall Street has basically said I don't want to play right here but uh their their projections are strong. They raised their estimates for the coming quarter and for the full year and and I think here we're looking at another uh fallen angel that is worthy of of a a buy the dip strategy. Yeah, pulling back uh more than 30% in just a couple of months is a really sharp pullback in a otherwise very solid company that's seen a lot of growth in the last year. So to see such a sharp pullback I mean in any of these stocks in the AI sector we have seen this kind of volatility where it can swing 30% 40% in either either direction really uh in the span of a week or so. for investors, especially long-term investors, what advice do you have for weathering the storm during this massive AI buildout where it seems like the market is constantly trying to re-evaluate what's the real value of this AI story? Where is the AI story heading? Have we seen this in the past where you see these really large swings even on solid companies? we have and and I think one of the ways that you um insulate yourself uh and you can't totally uh wipe out the volatility effect is to look at the chain which starts with the chips from Nvidia through the routers and has to sit somewhere. They have to sit in a data center. Uh even Elon Musk is is backing away a bit from putting data centers in space. So, we're talking about physical data centers. It's become a hot button issue for the midterm elections with a lot of communities pushing back on uh maybe illconceived uh construction projects placed next to single family homes which is you know causing some concern in certain communities. But the reality is every major innovation whether it was the railroads or the in the 1800s the uh interstate highway system that uh President Eisenhower you know really championed in the mid50s they all involve construction projects and innovations and you know there's always a a nimi attitude not in my neighborhood uh anytime you have massive construction construction projects. So, uh I think we'll get through this and if you pick and choose wisely the companies that are critical to the AI buildout but aren't as obvious as the NVIDIA uh of the world that you're going to be very happy looking down the road. Yeah, I think that picking and choosing part is the key point here and I know that is something that you dove into in this latest special report that you did giving the AI stocks to stay away from along with the best ones to buy right now in the AI trade. And if you want to get that free look at those stocks again marks do not buy and his best stocks to buy right now with the AI trade in September, you can scan the QR code or go to that link in the description to watch that full video for free and get all of those different stock picks. I think that picking and choosing and knowing which ones not to get into right now and which ones are the better buy right now is always the key for investors who are looking to really make the most from the AI growth story happening right now. And there are so many names out there. Mark, I want to talk about that a little bit before we get to your last stock on this list today. Mark, is just the overall market saturation. And we know uh given history, looking back at the dotcom days, not every stock that's involved in this AI trade is going to make it. Just like in the.com days, not every dot company made it. Some were losers and and completely are no longer a company and others are doing phenomenal right now. And so in this AI story, do you think we're going to have as many winners and losers or is there so much growth right now that there's room for quite a few winners in this buildout story especially? >> I think there's room for quite a few winners. Uh and and the key here is that all the companies we're talking about have very solid earnings. There are very few pet.coms here, you know, which is the poster child for what went wrong in the internet boom in 2000. You know, a lot of these companies had no earnings, had very poor business models, were overextended with debt. Uh here you're looking at solid companies that have found themselves right in the middle of an unexpected uh bonanza for their businesses. companies making connectors, companies making telecommunications equipment, companies in the um optics field really couldn't have imagined three years from now that that you know big business would be knocking on their door saying we need you. And that's what I think that's what we're seeing. These companies have earnings. If if you're dealing with AI companies where there's a lot of debt and no earnings, you've got a problem. For instance, if Open AI were public right now, it's not a stock we'd want to be looking at. And you know, SpaceX in a sense is in a similar position, >> [snorts] >> uh very uh hot technology story, but uh where are the earnings? You know, show me the money. So th those are the stocks potentially vulnerable similar to what happened in 2000. But these fe what I call feeder companies, the companies whose products are absolutely essential to feeding uh the buildout, I think are going to be big winners over the next three years. >> Oh, that is such good advice, Mark. Thank you for diving into your how you choose the winners from the losers. I think that's the important point. And I think what you said about earnings leads into this last stock pick really well because this one is a very solid company that's been around for forever but has seen a big resurgence like a lot of these names because of that new demand from AI. >> Well, the third pick here is Qualcomm symbol QCOM. And Qualcomm is another stock that's taken a big hit down over 40% from the uh June peak. Uh their earnings report was sort of flat. they met expectations uh and actually the stock bottomed out on that earnings report as opposed to uh taking a big huge dip. And then today a uh an announcement of a joint uh venture between Amazon and Qualcomm was announced in the data center build. And Qualcomm has some very uh interesting technology that they've acquired over the last three or four years in the chip field. And these chips are uh a different grade of of chip. It's not your standard Nvidia chip. It can be used in mobile devices uh to bring AI to the [sighs] factory floor and the supermarket floor. And now some of these faster chips that got the market very excited back in May and June. And if you go back in May, the company was trading under 140. had a fabulous earnings report and talked about these new chips and it ran all the way up to about 250. So big enthusiasm and then suddenly uh people just backed away from it and maybe that was over uh overdone on the upside but they certainly overdid it on the downside because it came right back down to where it broke out uh when they reported earnings here in August, late August. So yeah, you have a stock that's been sort of basing and now with today's announcement from Amazon, it's moving back above its long-term trend line, which will turn the power gauge rating bullish. So of the three, this is the one that is the first to poke their head up and and looks like if we close where we are today, the power gauge would be bullish. As you point out, established company, very solid. It's at the high end of the market cap range for what I'm looking at now. They've got $178 billion market cap, but they also have 44 billion in revenue. So, this is a serious company and the announcement today about Amazon should be a catalyst that'll trigger the stock back into an uptrend. Yeah, now this is a name that compared to the other two that we looked at and what analysts have to say uh the analyst community if you look at their their price targets on the first two we talked about there seem to be quite more uh room to grow but in Qualcomm in particular the analysts aren't showing a huge growth story from where it is today and I know we're still at a massive pullback like you mentioned pulling back quite a bit from the highs it saw uh in the early to midsummer um but do you think that the analyst community is being more cautious on Qualcomm simply because it is a larger, more established company. Uh why are we seeing so much bullishness on future price predictions for the first two compared to what Qualcomm is doing? >> Uh basically because of the last earnings report, Bridget, the last earnings report, as I said, just met expectations and the market is looking for companies that beat expectations. But ironically, uh the uh analysts and the the traders and portfolio managers are taking a different point of view. So with the first two the estimates uh price targets are there but people sold the news. In the case of Qualcomm uh the estimates have come down but now we've got a a catalyst a big announcement with one of the three major players in the data center buildout and I think the analysts are going to have to readjust their thinking. So we're we're hopefully ahead of the curve here with this idea. >> Yeah, I wanted to talk about that major catalyst getting a a deal like Qualcomm did with Amazon right now. How big of an impact can that have on future earnings? I know when we just saw the release that wouldn't have been factored in there, but how big of an impact can you expect from a major deal with, like you said, one of the biggest hyperscalers out there? >> Well, this is major because they're talking about a multi-generational product. Uh, in other words, a product not just for uh this growing AI infrastructure, but a product that will be they can build on. And it's really uh it's a nextgen data center product and that's big you know that uh I don't think people had factored that in uh they're really talking about a different paradigm in terms of AI uh data center infrastructure and that's big when you can find a stock that's uh already established in an industry and Qualcomm's been around quite a while where you can uh create customized solutions for the fastest growing subindustry in America and data center I guess I'd call a subindustry uh it's a major opportunity and uh you're looking at optical solutions as we talked about earlier combined with customized uh silicon chips and as AI workloads grow the need for these um advanced solutions is only going to get more urgent and the fact that uh Amazon on tapped Qualcomm to work on their customized AWS solutions is big. It's it's really big and just fortunate uh for your viewers, our viewers that this announcement came right before we uh filmed the uh the segment. So, right place, right time I believe for Qualcomm. >> Yeah, very timely story today getting that new news in there for Qualcomm. Three really great stocks to look at today, Mark, to buy on the dip for our viewers. Thank you so much for sharing those. And again, the stock picks don't end here. If you want to hear some more suggestions from Mark, including the AI stocks that he would stay away from in this market right now, again, scan that QR code or go to that link in the description and go get his free list of stocks that he is looking at his buy or drop list right now. You can get that link right in the description and go watch that from here. And if you want to hear more from Mark, we have him on every month. Here is the last conversation we had last month with some other great market advice from someone who's been in the market for a long time. It's advice you don't want to miss. So you can watch that full interview