Where are the bargains on the ASX after a shocking September?

September was a shocking month for the Australian share market. The ASX 200 and the broader All Ordinaries both plunged 5.2%, falling more than the US S&P 500, German DAX and UK FTSE. Patient investors have been waiting for a decent buying opportunity for over six months and may have finally been presented one!

Big Discounts

Unsurprisingly the fall was fairly broad based, but the largest falls were contained to the mining and finance industries. The 13% plunge in the iron ore price (to a five-year low of $77) saw the major miners Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) fall 6%, while smaller peer Fortescue Metals Group Limited (ASX: FMG) dropped 14%.

Oil also fell, dragging down Santos Ltd (ASX: STO) and Oil Search Limited (ASX: OSH) shares 8% to a five-month low. Similarly, the price of gold fell, taking with it the share price of Regis Resources Limited (ASX: RRL) and Newcrest Mining Limited (ASX: NCM) by between 7% and 15%.

Bucking the trend of recent times, the big four banks had a terrible month. Westpac Banking Corp (ASX: WBC) was the biggest loser, down nearly 8%, however the forecast forward dividend yield is now nearly 6% again!

There was little movement in medical and healthcare stocks, in fact sector favourite CSL Limited (ASX: CSL) actually rose 1%, while Cochlear Limited (ASX: ANN) and Ansell Limited (ASX: ANN) fell by only 2%, easily outperforming the broader market.

There were some big moves in retail and consumer discretionary, in particular JB Hi-Fi Limited (ASX: JBH) continued to be out of favour with investors after the group announced in August that the financial year had started slowly. I believe the market is underestimating the potential impact that the new range of Apple products could have on JB’s turnover this financial year. The share price plunged 9% last month to take the two-month fall to 23%. I would argue that JB’s outlook doesn’t justify a trailing price to earnings ratio of just 12.

Other Options

Top Motley Fool investment advisor Scott Phillips named his #1 dividend-paying stock for 2014-2015. With solid growth prospects and a fat, fully franked dividend, this ASX stock could be a huge winner for your portfolio. Discover the name and code FREE by clicking here now.

Motley Fool contributor Andrew Mudie owns shares in FMG. You can find Andrew on Twitter @andrewmudie

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