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Picks for the Pullback

Looking to buy on the dip? These stocks are a good place to look.

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Stocks took a beating Thursday as concern mounts over the strength of the recovery and the ongoing European sovereign debt crisis. Seeing red splashed around your computer monitor, and in your portfolio, is never a fun feeling, but there can be some potential upsides, as well.

Before this correction stocks looked, at best, fully valued, and there weren't many good opportunities to put new cash to work in the stock market. Although there have been a lot of big drops in stock prices during the last few weeks, that doesn't mean that everything is suddenly a buy. The sell-off is happening for some fundamental reasons. The economy is almost certainly slowing down again, and there is a chance that we are headed toward another recession. Europe's debt woes don't look any closer to being solved as the contagion spreads out from small economies such as Greece and Portugal to big ones like Italy.

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Jeremy Glaser does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.