6 Stocks to Buy in September

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It's been a crazy few weeks in the stock market. Many nerves have been frazzled.

On the plus side, volatile markets are exactly where we can find deals. For this edition of my monthly picks, I'm going to highlight six stocks that I believe are now buys.

Let's start off with the two some may call boring. I call them the safest bets of the bunch.

2 blue chips on sale

Company

Dividend Yield

YTD Price Change

Berkshire Hathaway (NYS: BRK.A) (NYS: BRK.B) None(9%)
Disney (NYS: DIS) 1.2%(9%)

Sources: Yahoo! Finance and Google Finance.

Critics say we can't get the sweetheart deals Warren Buffett can. We saw that with Goldman Sachs and General Electric during the heat of 2008's meltdown and recently with Bank of America. In each case, Buffett's holding company Berkshire Hathaway got the security of a regular dividend payment via preferred shares (ranging from 6%-10% per year) plus equity upside through warrants.

My thought: Why not participate in these deals by buying shares of Berkshire and having the world's greatest investor work for you? Trading just north of book value, the "Buffett premium" on the price of shares seems more myth than reality.

As for Disney, I enjoy owning its suite of offerings, from ABC to Walt Disney World to Pixar and Marvel. But what has me really excited is its cable sports powerhouse ESPN. Believe it or not, for the first nine months of its fiscal year, Disney's cable networks (of which ESPN is the major player) have contributed 59% of Disney's operating income. And it's grown that operating income by 17% over last year. So yeah, buying in at a below-market 11.7 times forward earnings seems like a reasonable move to me.   

2 beaten-down steel plays

Company

Dividend Yield

YTD Price Change

ArcelorMittal (NYS: MT) 3%(42%)
Nucor (NYS: NUE) 4.1%(18%)

Sources: Yahoo! Finance and Google Finance.

Let me start by saying I'm by no means an expert on the steel industry. However, the numbers here are quite impressive.

As a literal raw material in world growth, the steel industry is quite tied to the prospects of the economy. Wild swings are common. My interest gets piqued on the downswings.

My fellow Fool Matt Koppenheffer is also no steel expert, but he makes the case for ArcelorMittal beautifully. For a cyclical company, we need to look at longer periods of time to get a better picture of the ups and downs. So while ArcelorMittal's 5.7 forward P/E ratio is sexy, it's this line from Matt that's more important: "With a price-to-average 10-year earnings of just 7.3, the stock looks almost undeniably cheap to me."

Meanwhile, the Motley Fool Stock Advisor selection Nucor had been sitting patiently on my watchlist until earlier this month, when I bought in. With about a fifth of ArcelorMittal's sales, it doesn't have all the scale advantages of the world's biggest steel producer. Of course, size may be overrated for the innovator of the minimill. And with $18 billion in sales, the U.S.-based Nucor is no pipsqueak.

Even though it isn't quite as cheap as ArcelorMittal, Nucor also fares well with a 10-year look. Add that to its well-respected management and tasty 4.1% dividend yield and I think you've got a market-beater from here.

2 disaster plays

Company

Dividend Yield

YTD Price Change

BP (NYS: BP) 4.3%(11%)
Transocean (NYS: RIG) 5.7%(19%)

Sources: Yahoo! Finance and Google Finance.

Remember the BP Gulf oil spill back on April 20, 2010? I think it's time for investors to revisit it. I can make my case simply.

Since the day before the spill, both BP and Transocean (the oil rig owner) have lost a third of their values. For BP, that means a more than $60 billion loss of market capitalization!

For a Big Oil comparison during that time period, ExxonMobil's market cap has increased $40 billion, or 12.5%, and Chevron's has gone up by $36 billion, or 22%.

There's still a lot of finger-pointing among the players in the Gulf oil spill and the sorting out process will continue on for years. But here's what we do know: If you believe BP's liability in the spill will ultimately end up closer to its $20 billion victim compensation fund than its $60 billion market cap loss, and if you believe Transocean has been largely unfairly dinged versus its eventual liability, there's opportunity here. Getting paid substantial dividends of 4.3% and 5.7% while we wait for the market to agree seems like a good deal to me.     

The bottom line
I think each of these six stocks -- Berkshire Hathaway, Disney, ArcelorMittal, Nucor, BP, and Transocean -- offer good risk/reward characteristics depending on the type of investment you're looking for. I personally own five of the six (I bought Nucor and BP within the last month) and I am seriously looking at the sixth (ArcelorMittal).

Five of the six pay meaningful dividends, one of my favorite things as an investor. For more dividend ideas, check out our most popular free report. It details the buy case for a number of long-term-focused dividend plays. Just click here to read it now. It's free!

At the time this article was published Anand Chokkaveluowns shares of Berkshire Hathaway, Disney, Nucor, BP, Transocean, Bank of America, and ExxonMobil. That's seven stocks, if you're counting ... that has to at least be close to a personal record.The Motley Fool owns shares of Transocean, Nucor, Berkshire Hathaway, and Bank of America.Motley Fool newsletter serviceshave recommended buying shares of Berkshire Hathaway, Walt Disney, Chevron, and Nucor. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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