Here's Why You Should Start Buying "Bargain Bin" Stocks Today...

OK, bargain bin diver, have I got a deal for you…

As the stock market looks to rebound following the Dow’s recent seven-day clunker, we’ve got a great chance to pick up some quality stocks off the discount rack.

And there’s one stock in particular that’s looking like a real doozy of a bargain right now. This could be the perfect time to grab it before it “jets” higher…

Here’s the deal:

The market has forced us into the strongest stocks this year. While entire sectors were heading off steep cliffs, we clung to the large-cap market leaders—which were some of the only stocks that remembered how to actually go up.

It’s been a winning strategy for us. We’ve done well while the major averages have chopped most investors to bits this year. We win, they lose. Can’t complain about that…

But over the past couple of weeks, I’ve noticed some subtle changes in the markets. While many strong stocks have consolidated, some of the biggest losers of the year are starting to catch bids. That’s right—the redheaded step children might finally weasel their way out of the time-out chair and start posting some serious gains.

Take the lowly industrials, for example. These stocks have just plain sucked this year—and with good reason. The market has had it in for the industrials, with a strong dollar, trouble in China, and the commodities crash heavily weighing down the sector. Over the past three months, only materials and energy stocks have fallen further.

Industrial Strength Losses...

The industrials sector has dropped more than 3.5% over the past three months alone. Do investors want to own these names? You kidding?

“This year through June, investors have pulled $4 billion from industrial-sector mutual funds and exchange-traded funds, according to fund tracker Morningstar Inc. They poured $9 billion into such funds from 2012 through 2014,” The Wall Street Journal reports.

But the worst might finally be over for these beaten-down stocks. Some fund managers are even getting back into industrials because it’s one of the few places they can dig up bargains.

Here’s the Journal again:

“The hunt for bargains in a sector that is being buffeted by economic crosswinds is the latest sign of investors’ struggle to find cheap securities in a world where many assets are perceived to be richly valued amid soft economic fundamentals and expansive central-bank policy. Many analysts and traders have forecast repeatedly since the financial crisis that industrial shares would lift off, only to be disappointed.”

That’s right. Most folks have been dead wrong when it comes to growth predictions. So any bets on big industrial stocks like Caterpillar or United Technologies have earned nothing but ridicule recently (both of these industrial giants are down double-digits this year).

But now, it looks like the search for bargains has begun. And there’s no better place to look than these slammed industrial stocks. They’re already starting to move. Heck, Caterpillar bounced more than 3% yesterday…

Now’s the time to hop on this new trend before investors takes notice.

Early bird, come get your worm…

Greg Guenthner
for The Daily Reckoning

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