Buy the Dip Monday: The 88% Drawdown Hiding a 15% Earnings Yield

This Week's Setup

The S&P 500 CAPE sits at 38.9, still in the top decile historically, while the value screener is pulling up names trading at single-digit P/Es and 40–88% drawdowns off their 52-week highs.

Fear & Greed at 45 signals investors are cautious but not panicked, and the VIX under 16 means volatility is priced for cruise control.

That backdrop makes the dispersion interesting: energy names are down 23% with analyst targets 34–37% above spot, and a semiconductor equipment maker is off 88% while throwing 12% FCF yield.

Quick Scan

The 8 Names

1. KLA Corporation (KLAC)

P/E: 6.80 | Earnings yield: 14.71% | 52w drawdown: -88.35%

KLA's 12% FCF yield and 15% earnings yield at a 6.8 P/E make it the lowest-multiple name on this screener; the company posted 24% revenue growth and a 66% ROIC last year, metrics that don't usually pair with single-digit multiples. The 88% drawdown from the 52-week high brings the stock under $240 while analysts hold a $1,855 consensus target, implying 673% upside if the group is even halfway right.

The normalized 10-year P/E sits at 101, which means current earnings are running far above the long-term average; if margin compression or a semiconductor capital equipment cycle downturn brings earnings back toward trend, the low headline P/E becomes a value trap. Short interest at 2.6% of float is unremarkable, but the 88% drawdown itself signals the market is pricing in a sharp mean reversion.

CEO Richard Wallace sold shares on June 11, and two other executives sold in early July; net insider activity over six months shows 7,600 shares sold with zero buys. Earnings are due July 28 with consensus at $1.00 EPS on $3.6 billion revenue.

2. American Eagle Outfitters, Inc. (AEO)

P/E: 10.14 | Earnings yield: 9.86% | 52w drawdown: -43.32%

AEO trades at a 10 P/E with a 7% FCF yield and 10% earnings yield, and the retailer maintains a 37% gross margin while revenue grew 4% year-over-year. The setup here is a profitable teen-apparel business down 43% off its high and trading at a 22% discount to the $19.67 analyst target.

Normalized 10-year P/E is 15.2, so the current multiple reflects a modest discount to the stock's own history, not a deep anomaly. Debt-to-equity at 1.11 and EV/EBITDA at 7.0 are serviceable but not fortress-balance-sheet metrics, and the company pays a 3.1% dividend with an 8% shareholder yield when you include buybacks.

All insider activity over the last six months has been selling: 1.06 million net shares sold, zero buys, and short interest stands at 10.8% of float. The new CFO, Ravi Thanawala, was appointed recently after Mike Mathias transitioned out; leadership changes at the finance seat can be routine or a signal of strategic friction.

3. VanEck Gold Miners ETF (GDX)

P/E: 17.02 | Earnings yield: 5.87% | 52w drawdown: -33.29%

GDX offers a 6% earnings yield at a 17 P/E after a 33% drawdown, and recent news flags that gold climbed as Fed rate-cut bets eased; the metal's move higher while real yields stayed elevated is the kind of setup that historically precedes extended precious-metals runs. The ETF structure gives you diversified exposure to producers without single-name operational risk.

The ETF has no FCF yield, dividend yield, or price-to-book data in the pipeline, so you're buying on valuation and momentum alone; trailing one-year trend is 0.19%, meaning the fund is essentially flat over the last 12 months despite gold's recent strength. Lack of positive carry or dividend income means you need metal-price appreciation to generate returns.

Gold miners often lag spot gold on the way up and lead it on the way down; if real yields rise or the Fed holds longer than the market expects, the 33% drawdown can extend before the thesis plays out.

4. First Solar, Inc. (FSLR)

P/E: 15.20 | Earnings yield: 6.58% | 52w drawdown: -25.02%

First Solar posted 24% revenue growth, a 17% ROIC, and a 41% gross margin while holding a 0.06 debt-to-equity ratio; the company is essentially unleveraged and generates a 5% FCF yield at a 15 P/E. The stock is down 25% from its 52-week high, and Wells Fargo recently lifted its target to $320 from $255, citing renewed demand for U.S.-manufactured solar modules as China-ban chatter heats up.

The analyst consensus target of $244 implies only 4% upside from the current $235 price, the narrowest gap on this screen; if the Street is right, you're buying fair value, not a bargain. The normalized 10-year P/E of 22 suggests the current multiple is at a 30% discount to the stock's own history, but that history includes the solar boom-bust cycles of the last decade.

Insider activity over six months shows 3,100 net shares bought, with buys and sells each at 2% of transactions; the signal is neutral. Short interest at 8.5% of float is elevated for a stock with strong fundamentals, which can mean either skepticism about policy tailwinds or a setup for a squeeze if the China-ban thesis firms up. Earnings are July 30, consensus $2.81 EPS on $1.1 billion revenue.

5. Baker Hughes Company (BKR)

P/E: 17.17 | Earnings yield: 5.82% | 52w drawdown: -23.67%

Baker Hughes combines a 13% ROIC with a 5% FCF yield and a 24% drawdown; the company landed a subsea equipment deal in Angola and a North America geothermal partnership in recent weeks, both visible in the news flow. Analysts hold a $72 target against the $54 spot price, implying 33% upside, and the stock trades at a 17 P/E with revenue flat year-over-year.

Insiders added 512,600 net shares over six months, with buys at 1.3% of transactions and sells at 78%; recent Form 4 filings show CEO Lorenzo Simonelli and CFO Ahmed Farhan Moghal both transacting on June 16, and board member Maria Borras on July 2. Earnings are due July 26, consensus $0.48 EPS on $6.5 billion revenue.

The 10-year earnings yield of 1.5% is the lowest on this screen, meaning current earnings are running far above the long-term trend; if oilfield services demand normalizes or rig counts roll over, the 17 P/E could re-rate higher. Debt-to-equity at 0.86 is manageable, but the EV/EBITDA of 13 is elevated for a cyclical industrials name.