Don’t Fall for the September Trap! - 4 Heavily Discounted Stocks I’m Accumulating Now

September is finally here. And warnings about an approaching stock market correction are spreading everywhere. Historically, September has been the weakest month for the S&P 500, producing an average return of approximately -0.7% During midterm election years, that average falls slightly further to -0.8%. History does not guarantee another decline, but investors have several legitimate reasons to prepare for greater volatility. The market has already delivered strong gains this year, leaving many tech and AI stocks priced for continued excellence. Institutional investors have reportedly started reducing exposure to some of their largest AI positions, potentially locking in profits before economic uncertainty increases. At the same time, the Federal Reserve has adopted a more hawkish tone, inflation remains above its long-term target, Treasury yields are rising, and expectation of another rate increase have increased. Higher yields raise borrowing costs, reduce the present value of future earnings, and create particular pressure for AI companies financing massive data center projects with debt. The upcoming employment report and inflation data could therefore become the major market moving events. Stronger than expected numbers could reinforce the case for higher interest rates and trigger another sell-off in expensive growth stocks. However, even if September brings a correction, it remains just another month in the life of a long-term investor. A market decline does not automatically mean the great businesses have become weaker. In many cases, it simply means their shares have become cheaper. The market has experienced corrections many times before. Yet, high-quality companies with growing revenue, strong cash flow, and durable competitive advantages have repeatedly recovered and reached new highs. Instead of fearing every red day, prepared investors should maintain a watch list and determine the prices they are willing to pay. If September delivers the correction everyone expects, it could also deliver something far more valuable, an opportunity to purchase outstanding businesses at prices unavailable during the excitement of the previous rally. Before moving on, I have one quick request. If you find value in this research, please like the video and consider subscribing. Your support genuinely means a lot to me and motivates me to produce even more thorough, data-driven analysis. Please remember that I'm not a certified financial analyst. This content is for information and entertainment purposes only. Always conduct your own due diligence before making any investment decision. Now, let's get to the main point. In this video, I will discuss four stocks that I believe every investor should keep on their watch list. If their prices decline while the fundamental investment thesis remains intact, the pullback could present an attractive buying opportunity. First stock on today's list is Coherent. The investment case for Coherent is simple. AI data centers cannot scale on computing power alone. Thousands of advanced GPUs must exchange enormous amounts of data at extremely high speeds, making optical connectivity an essential part of the infrastructure. Coherent supplies the lasers, transceivers, and optical components that enable these systems. And customer demand is currently exceeding its manufacturing capacity. Fiscal 2027 capacity is effectively sold out. Purchase orders extend into 2028 and long-term agreements run through the end of the decade. Customers are therefore reserving production years in advance, giving Coherent exceptional revenue visibility. The latest results strongly support this thesis. Fourth quarter revenue reached a record 2.05 billion, rising 34% year-over-year and beating the consensus estimate of approximately 1.98 billion. Adjusted earnings increased 74% to 1.74 per share, comfortably exceeding expectations of around 1.62. Data center and communications revenue increased 59% year-over-year and now represents 79% of Coherent's total sales, confirming that the company has evolved into a major AI infrastructure supplier. Non-GAAP gross margin expanded to 40.2% while full-year operating income surged nearly 210% to 898 million dollars, demonstrating powerful operating leverage. Management guided for first quarter fiscal 2027 revenue of up to 2.4 billion, a significant sequential increase from the record 2.05 billion reported in the fourth quarter. All recent analyst earnings revisions have been upward. Consensus EPS is projected to reach 9.42 in fiscal 2027 and 13.96 in 2028, representing expected growth of approximately 68% and 48% respectively. Coherent is also transitioning from 3-in to 6-in indium phosphide wafers, which management says can deliver approximately four times the output at roughly half the cost. This expansion can unlock additional revenue while improving margins. Despite these results, the stock declined after earnings in what appeared to be a sell-the-news reaction. Capital spending remains a risk, but Coherent is expanding against contracted demand, not speculation. The core opportunity is clear. AI demand is accelerating, optical connectivity is becoming a critical bottleneck, and Coherent cannot currently manufacture enough to satisfy its customers. The second stock on today's list is Micron. The central Micron thesis is that this is no longer a typical memory cycle driven by temporary shortages and uncontrolled capacity expansion. AI has made memory a mission-critical component, while high-bandwidth memory requires advanced manufacturing, specialized packaging, and considerably more production capacity than conventional DRAM. Micron has already sold out its entire calendar 2026 HBM supply, including HBM4. Management also expects tight conditions to continue beyond 2027. CEO Sanjay Mehrotra explained, "Our customers are recognizing that supply shortages in memory and storage will take significant time to improve, even as we expect industry supply to improve gradually in 2028. This time may be different because Micron is not expanding capacity solely in response to temporary spot market prices. The company has signed 16 long-term strategic customer agreements with hyperscalers, data center operators, and automotive customers. These agreements represent approximately 100 billion in expected contractual revenue and 22 billion in deposits and related commitments. Once completed, these agreements are expected to cover roughly half of Micron's revenue. Many include committed purchasing volumes and price floors designed to protect margins. This gives management greater confidence when investing billions in new production capacity and reduce the risk of blindly overbuilding into short-term demand. The valuation remains particularly important. Micron trades at approximately 12.5 times forward non-GAAP earnings, compared with the tech sector median of around 22.7 times. The market therefore continues to value Micron largely as a cyclical memory producer, despite its improving revenue visibility and growing exposure to high-value AI products. The cycle has not disappeared. Competitors could eventually add excessive capacity, memory prices could normalize, and geopolitical risks remain significant. However, sold-out HBM production, supply constraints extending toward 2028, and binding customer agreements make Micron's earnings profile potentially more durable than in previous cycles. The opportunity exists because the business model is changing faster than the valuation investors are willing to assign it. Third stock on today's list is Amazon. Amazon's investment appeal comes from three businesses reinforcing one another. AWS provides high-margin cloud growth, advertising monetizes enormous customer traffic, and the retail network creates a logistical advantage that competitors cannot easily reproduce. The market is focused on Amazon's rising capital expenditure, but management's later disclosure suggests that this spending is creating durable, contracted infrastructure rather than uncontrolled costs. AWS revenue increased 36.7% to 42.2 billion, while operating income reached 16.6 billion. Its operating margin expanded by 520 basis points to 38.2%. AWS now represents only 21.1% of Amazon's revenue, but generates approximately 60.5% of total operating income, meaning continued cloud growth can lift company-wide profitability disproportionately. Amazon's advertising business provides another powerful growth engine. Revenue increased 26.2% to 19.8 billion, and the segment carries limited incremental costs. Meanwhile, North American retail sales grew 16% to 116.2 billion, while international sales increased 15% to 42.2 billion. The central concern is capital expenditure, which is approaching 220 billion annually and has temporarily pushed trailing free cash flow to negative 7.6 billion. However, CEO Andy Jassy explained that servers and networking equipment generally recover their cost in less than 3 years, operate for at least 5 to 6 years, and are commonly supported by AI capacity contracts lasting 5 years or longer. This creates the potential for strong free cash flow after the initial payback period. Amazon's Tranium accelerators and Graviton processors have already exceeded a combined $25 billion annual revenue run rate while growing at triple-digit percentages. The company is also expanding its Nvidia GPU capacity and developing the software layer through services such as Bedrock agent core. At approximately 25 times forward earnings, Amazon is valued more like a mature business despite accelerating AWS growth. Component inflation, regulation, and execution remains risk, but Amazon's expanding cloud, advertising, and logistical moats make the long-term thesis compelling. At forward 2028 P/E ratio of 19.4 times, the stock looks a bargain at current price and on any dips from here on. Fourth stock on today's list is Nvidia. Nvidia's investment appeal is the extraordinary disconnect between its projected growth and valuation. The market continues treating Nvidia as though the AI infrastructure cycle is approaching maturity, while management expects revenue to grow approximately 70% in fiscal 2028 and describes that outlook as supply constrained. Nvidia reported fiscal second quarter revenue of $96.22 billion, increasing 106% year-over-year and beating consensus by more than $4 billion. Data center revenue surged 117% to $89 billion, while adjusted EPS of $2.22 exceeded expectations. Management guided for third quarter revenue of $108 billion, above the $104.6 billion consensus. Nvidia is also generating substantially more revenue from every gigawatt of data center power. CEO Jensen Huang explained that Hopper produced approximately 18 billion per gigawatt. Grace Blackwell generates around 25 billion and Vera Rubin could reach 40 billion. Therefore, Nvidia can continue delivering exceptional growth even if physical data center expansion moderates. The valuation remains compelling relative to this outlook. Nvidia trades at approximately 11 times fiscal 2029 consensus earnings while some estimates suggest EPS could eventually reach 22 to 23 per share. Even applying a conservative 22 times multiple to $22 in earnings would imply a value of approximately $484 per share. Competition, export restrictions, and slower hyperscale spending remain genuine risks. However, Nvidia's accelerating demand, expanding product value, and 74% plus gross margin suggests that the market is still underestimating its long-term earnings power.