The S&P 500 is in the midst of a pullback from a multi-year high and there are two camps forming. One side believes this is the beginning of the end for the current bull market. The other argument is that the current pullback of around 4% is merely a normal and healthy sell-off that occurs during even the strongest bull markets. I fall into the latter camp and therefore am looking for buying opportunities on weakness.
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Four Stocks from Four Very Different Sectors
(Nasdaq:EBAY) is one of the most recognizable websites in the country that allows buyers and sellers to come together to facilitate transactions. The company also owns payment and settlement service company PayPal. The stock is roughly 6% off a five-year high, is sitting on price support and its 50-day moving average is the $35 area. Fundamentally, eBay is attractive with a PEG ratio of about 1.2 and forward P/E ratio of 13.4. The PayPal division and the potential future growth of online payments differentiates eBay from other related website companies.

Aetna (NYSE:AET) is a healthcare benefits company in the United States that offers products to individuals, group insurance as well as pension management. A PEG ratio of approximately 0.9, a forward P/E ratio of nearly 8.5 and a dividend yield of 1.5% put the stock on my radar. Technically the stock recently broke out to a five-year high and has since pulled back to support near $47. The chart is similar to eBay, but in an entirely different industry. The one major wildcard for AET and the entire health benefits sector is the outcome of the Obamacare battle. As of now, it appears the sector could be winners with most decisions rendered by the Supreme Court.

SEE: Introduction To Technical Analysis Price Patterns

U.S. Bancorp (NYSE:USB) is a large regional bank that offers financial and banking services to customers mainly in the Midwest and Western parts of the country. The stock is approaching its four-year high and holding above the uptrend line, the 50-day moving average and the price support. Fundamentally, the stock offers a 2.5% dividend yield and trades with a PEG ratio of about 1.11 - both appealing to investors. The biggest risk for USB is another situation in Europe that takes down all banks, even unrelated U.S. companies.

Franklin Electric Company (Nasdaq:FELE) operates in two segments, water systems and fueling systems. The water systems segment offers products such as motors and pumps used in various industries. The fueling systems segment provides similar products that are used mainly by the industrial and energy sectors. The stock offers a 1.1% dividend yield, however the PEG ratio of around 0.42 is what makes FELE an attractive investment. Technically the stock has struggled, losing approximately 7%, since hitting a four-year high in February. The weakness offers a long-term buying opportunity for value investors.

SEE: 5 Must-Have Metrics For Value Investors

The Bottom Line
Investors must remember that I may be wrong in my synopsis that the current pullback is merely a short-term blip on the screen. If the stocks and the overall market continue to fall and the technical indicators breakdown, it would be best to sell any positions and take a small loss. This is the key to success.

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At the time of writing, Matthew McCall did not own shares in any of the companies mentioned in this article.

Tickers in this Article: EBAY, AET, FELE, USB

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