NEW YORK (TheStreet) -- In the category of "Things That Go Bump in the Night," I'm beginning to sense an opportunistic shift happening in the stock market right now under our noses and under the radar".There's been plenty of media hype about the possibility of interest rates rising as investors continue to dump bonds and buy stocks with good dividends. That's driven companies like Procter & Gamble ( PG) up to new 52-week highs. Investors have been chasing yield and that's partly why the blue-chip stock dividend payers including PG and Johnson & Johnson ( JNJ) have been driven upward to unsustainably high price levels. The Federal Reserve and Chairman Ben Bernanke will factor into this equation beginning Wednesday. That's when he'll make yet another policy announcement after the Federal Open Market Committee meeting. The wording of this announcement might trigger a short-term stock market correction, especially if the Fed injects any uncertainty about interest rates. The Fed told investors repeatedly it'll keep the federal funds rate at 0% until the U.S. unemployment rates falls to 6.5% from its current level at 7.7%. Even a hint of waffling on that promise could cause a selloff in what I call the "Dividend Dynasty Stocks," or DDS. If you're an investor you probably own some of them. So I'm suggesting the possibility of a temporary sector rotation out of the high-flying DDS-type equities and into sectors where stock prices haven't gone ballistic yet. On his TV show "Mad Money", Jim Cramer referred to this possibility as well and identified some sectors that may benefit from such a sector shift. Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust --enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements. Jim mentioned the financials, the insurance companies and even the transportation sector. It may be true the next PG-style investment opportunity may be in a laggard such as Prudential Financial ( PRU). PRU provides a range of insurance, investment management and other financial products and services to both individual and institutional customers in the United States and internationally. (By the way, PRU wasn't on Jim's list during his telecast.) PRU is selling at a little less than seven times its forward (one-year) expected earnings and has a price-to-earnings-to-growth (PEG) ratio of only 0.58, which usually indicates undervaluation. If an overall stock market correction brought PRU's stock price down to its March 1, 2013, intraday low of $54.29, the dividend yield-to-price would rise to nearly 3%.
Another sector that is looking undervalued is technology. When an investor looks at legacy companies like Microsoft ( MSFT) with its nearly 3.3% dividend and trading at just nine times forward earnings, one could envision a one-year total return of 25 to 30%. MSFT will report its current quarterly earnings on April 18, less than a month from now. Did you know the analysts' consensus average earnings estimate is anticipating an EPS increase of around 28%? The same group of around 30 analysts expect sales growth and revenue to increase by over 19%. As the one-year chart suggests, there is plenty of upside potential for Microsoft's share price. If it was to exceed the analysts' estimates then we may see a prettier picture than the one below. MSFT data by YCharts
Yet another technology company that could be investors "next PG" is also a Nasdaq 100 stock that short-sellers like to short. KLA-Tencor ( KLAC) designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nano-electronics industries. KLAC also serves the light emitting diode (LED), data storage and photovoltaic industries, as well as cutting-edge materials research for the microprocessor industry. It pays a sustainable (37% payout ratio) dividend of 3.12% based on a share price of $51.35. A quick and unexpected market correction may see KLAC's stock price temporarily drop below $49, which would increase the yield-to-price. The following one-year chart illustrates how far this productive company has rebounded. Over the past few weeks the share price has been correcting, making for favorable buying conditions. KLAC data by YCharts
This major player in the semiconductor industry had, as of the end of 2012, $2.58 billion in total cash and operating cash flow (TTM) of over $858 billion. KLAC management guided conservatively for 2013 and if it can surprise to the upside on revenues and EPS (as it did three out of four quarters in 2012) the stock may surge. This would be accelerated by the potential of a short-covering squeeze.