Top 25 Quality Stocks Trading Well Below Their Highs
Marvin's rules found 25 strong businesses trading well below their highs. They are ranked by Marvin's scores, which compare each company with others in its industry. A lower price alone does not make a stock a good dip candidate.
Buying on a dip means looking at companies whose share prices have fallen from a recent peak. A price drop alone says little about a business, because some companies fall for good reasons. Marvin's list pairs the drop with business strength, so every stock here also has a high quality score.
The 25 stocks span technology, healthcare, energy, financials, industrials and more. Their profiles differ a lot. Some show fast growth and fat margins, while others show steadier growth. A few have gaps in their data, which the blurbs point out.
Keep in mind that a falling price can reflect real problems the numbers do not yet show. Treat this list as a starting point for your own research, not a set of instructions.
The list
How Marvin ranked these stocks
Marvin chose these stocks with one rule: strong businesses trading well below their high. The list is then ordered by Marvin's scores. Those scores compare each company only with other companies in its own industry, so a high score means a company looks strong against its industry peers today, not against the whole market. The overall score blends business quality with opportunity.
Buy-the-dip ideas: strong businesses trading at least 15% below their high
The stocks, one by one
Alphabet Inc. GOOGL
Alphabet scores 96 overall, with quality at 97. Revenue grew 15.1% last fiscal year, and an operating margin of 33.1% points to strong profitability. Caution: free cash flow margin is lower at 11.9%, and debt-to-equity data is not available.
EQT Corporation EQT
EQT shows revenue growth of 63.9%, an operating margin of 42.5% and a free cash flow margin of 39.4%, with low debt-to-equity of 0.22. Caution: return on equity is modest at 10.7%, and one year of growth is only a snapshot.
Booking Holdings Inc. BKNG
Booking Holdings has a quality score of 95, an operating margin of 32.9% and a free cash flow margin of 33.8%, so it turns much of its revenue into profit. Caution: its opportunity score is lower at 66, and return on equity and debt data are missing.
Krystal Biotech, Inc. KRYS
Krystal Biotech grew revenue 33.9% last fiscal year, with an operating margin of 44.9% and a free cash flow margin of 58.5%. Those are very strong readings. Caution: its opportunity score is only 60, and debt and gross margin data are not available.
HEICO Corporation HEI
HEICO has a top-tier quality score of 97, with revenue growth of 16.3% and an operating margin of 24.0%, which suggest steady, profitable expansion. Caution: its opportunity score of 40 is low, so it looks less favorable than industry peers on that measure.
Sandisk Corporation SNDK
Sandisk posts revenue growth of 175.3%, an operating margin of 61.2% and return on equity of 72.7%, with almost no debt at 0.01 debt-to-equity. Caution: growth this fast in a single year is unusual and may be uneven in other years.
AngloGold Ashanti Plc AU
AngloGold Ashanti grew revenue 70.8% and earns a gross margin of 49.2%, with return on equity of 39.2% and debt-to-equity of 0.28. Caution: operating margin and free cash flow margin are not available, so profitability is only partly visible.
Dave Inc. DAVE
Dave grew revenue 59.7%, with a free cash flow margin of 50.7% and return on equity of 107.1%, all very strong. Caution: operating margin, gross margin and debt figures are missing, and a very high return on equity can reflect a small equity base.
CareTrust REIT, Inc. CTRE
CareTrust REIT scores 96 overall and grew revenue 60.8%, with moderate debt-to-equity of 0.27. Caution: return on equity is modest at 7.9%, and margin data is not available, so profitability is harder to judge.
Taiwan Semiconductor Manufacturing Company Limited TSM
Taiwan Semiconductor has an overall score of 96, a quality score of 97 and an opportunity score of 96. Those are strong readings against other semiconductor companies. Caution: no growth, margin or debt figures are available, so these scores are all the data we have.
TKO Group Holdings, Inc. TKO
TKO Group has an operating margin of 18.8% and debt-to-equity of 1.46. Caution: revenue growth was -3.1% last fiscal year, meaning sales slipped, and return on equity is only 6.8%. Its high score rests more on industry comparison than on growth.
Comfort Systems USA, Inc. FIX
Comfort Systems USA grew revenue 29.5% and earned return on equity of 44.6%, with low debt-to-equity of 0.11. Caution: margins are thinner than at many peers, with an operating margin of 16.5% and a gross margin of 25.7%.
Globus Medical, Inc. GMED
Globus Medical has a gross margin of 68.5% and a free cash flow margin of 24.0%, with revenue growth of 16.7%. Caution: return on equity is modest at 11.2%, and debt-to-equity data is not available.
Gentex Corporation GNTX
Gentex posted revenue growth of 9.6%, an operating margin of 19.3% and a free cash flow margin of 18.9%, a steady if unspectacular profile. Caution: growth is the slowest among the stronger names here, and return on equity and debt data are missing.
Monarch Casino & Resort, Inc. MCRI
Monarch Casino & Resort has a free cash flow margin of 27.8% and return on equity of 19.8%, but revenue growth was only 4.4%. Caution: its gross margin of 24.6% is thin, and operating margin and debt figures are not available.
Jack Henry & Associates, Inc. JKHY
Jack Henry has a free cash flow margin of 27.3%, return on equity of 24.5% and very low debt-to-equity of 0.04. Caution: revenue growth of 7.1% is modest, and its opportunity score of 67 trails its quality score.
United States Lime & Minerals, Inc. USLM
United States Lime & Minerals has an operating margin of 42.1%, revenue growth of 17.3% and almost no debt, with debt-to-equity of 0.00. Caution: its opportunity score of 60 is lower than its quality score, which keeps the overall score at 88.
The Charles Schwab Corporation SCHW
Charles Schwab grew revenue 22.0%, with a free cash flow margin of not reported and return on equity of 20.1%. Caution: its opportunity score is only 52, pulling the overall score down to 75, and debt and operating margin data are missing.
Axos Financial, Inc. AX
Axos Financial grew revenue 17.6% and earned return on equity of 15.5%, with debt-to-equity of 0.13. Caution: its free cash flow margin of not reported is unusually high, and cash flow figures for banks can be hard to interpret. Its opportunity score is 43.
First Financial Bankshares, Inc. FFIN
First Financial Bankshares has a quality score of 96 and return on equity of 13.5%, a decent level of profit on shareholder money. Caution: its opportunity score is only 44, and growth, margin and debt figures are not available.
IDEXX Laboratories, Inc. IDXX
IDEXX Laboratories has a gross margin of 62.4%, an operating margin of 32.0% and return on equity of 70.7%. Caution: its opportunity score is very low at 7, the weakest here, and revenue growth was a modest 10.4%.
Cisco Systems, Inc. CSCO
Cisco Systems has a gross margin of 64.5%, an operating margin of 24.3% and return on equity of 26.4%. Caution: revenue growth was moderate at 11.8%, and debt-to-equity of 0.49 is higher than at several other names here.
ASML Holding N.V. ASML
ASML Holding has an operating margin of 34.6%, a free cash flow margin of 33.9% and return on equity of 49.0%, with revenue growth of 15.6%. Caution: debt-to-equity data is not available, so its balance sheet is only partly visible.
Federal Signal Corporation FSS
Federal Signal grew revenue 17.1% and earned return on equity of 18.9%. Caution: margins are on the thinner side, with an operating margin of 16.2% and a free cash flow margin of 13.9%, and debt data is not available.
Cavco Industries, Inc. CVCO
Cavco Industries grew revenue 11.4% and earned return on equity of 16.3%. Caution: margins are slim, with an operating margin of 10.2% and a gross margin of 23.2%, and debt-to-equity data is not available.
Common questions
What does it mean to buy a stock on a dip?
It means looking at a stock after its price has fallen from a recent high, hoping the drop is temporary. It carries risk, because a lower price can reflect real problems and the price may keep falling.
Is a stock that has fallen always a good opportunity?
No. Prices fall for many reasons, and some of them reflect lasting damage to a business. That is why this list also looks at business quality, such as margins, growth and debt, instead of the price drop alone.
Why do some stocks here have missing figures?
Companies report their finances in different formats, and some measures do not apply neatly to every industry. Banks, for example, often lack a standard operating or gross margin. When a figure is missing, Marvin leaves it out, and it is worth checking the company's own reports.
Keep reading
- Top 15 Technology Companies With the Strongest Businesses
- Top 20 Large-Cap Stocks Right Now, Ranked by Marvin Scores
- Top 20 Stocks for Beginners: Large, Profitable, Low-Debt
- Top 20 Companies With the Strongest Businesses
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Marvin's scores (0-100) compare each company with others in its industry today. Growth and margin figures come from SEC filings. This is general information, not personal investment advice or a recommendation to buy or sell anything. Do your own research.