The stock market won’t go up forever. A strong 2023 and a rally to start 2024 can make it feel like the only way is up. However, the stock market is eventually due for a pullback. Inflation, the Federal Reserve’s decision on interest rates, the countdown for commercial real estate debt and other factors lead to stocks to buy on a pullback.
Holding some cash on the sidelines can leave you more prepared to accumulate shares at reduced prices. Investors looking for buying opportunities may want to consider these stocks on dips.
Duolingo (DUOL)
Duolingo’s (NASDAQ:DUOL) primary weakness is its valuation. The educational app has a 141 forward P/E ratio, which can use a bit of work. A correction can bring the valuation to a lower level and make it more enticing.
The company’s latest earnings report gave investors a lot to feel good about. Total bookings jumped by 51% year-over-year and revenue increased by 45% year-over-year, but net income was the brightest spot.
The company reported $12.1 million in net income compared to a net loss of $13.9 million during the same period last year. These growth rates represent slight accelerations from full-year results. Duolingo’s user base growth was also strong. Daily active users and monthly active users were up by 65% and 46% year-over-year, respectively.
The stock has the makings of a long-term winner. Cost-cutting measures will expand the company’s profit margins in subsequent quarters. The valuation is the only concern, but the lofty metrics make the stock more vulnerable to a pullback. A big drop can present a great buying opportunity.
Deckers Outdoor (DECK)
It’s always good to see non-tech companies that are growing at a fast pace. While tech stocks seem to dominate the news, it’s nice to see a footwear designer outperforming many stocks. Deckers Outdoor (NYSE:DECK) shares are up by 115% over the past year and have gained 541% over the past five years. The stock’s recent inclusion into the S&P 500 will only help matters.
Some of the company’s brands include Ugg, Hoka and Teva. These brands helped the corporation increase revenue by 16% year-over-year in the third quarter of fiscal 2024. Net income growth came in at 40% year-over-year.
For the past few quarters, net income growth has outpaced revenue growth. Net profit margins are above 20% and the stock trades at a 32 P/E ratio. Deckers offers growth at a reasonable price, and any correction will make the stock more enticing. The stock seems to have been invincible since the start of the year and has posted a 34% year-to-date gain so it may be due for a pullback.
Intuit (INTU)
Like the other picks on this list, Intuit (NASDAQ:INTU) has a history of outperforming the stock market. Shares are up by 66% over the past year and have gained 171% over the past five years.
The firm makes its money from several business applications. Turbotax and Quickbooks are the most well-known products, but Intuit also owns MailChimp, CreditKarma and others. The financial conglomerate regularly reports revenue and earnings growth, and the company didn’t disappoint in the second quarter of fiscal 2024.
In that quarter, revenue increased by 11% year-over-year while earnings per share more than doubled year-over-year. EPS went from $0.60 per share to $1.25 per share. Intuit’s guidance implies revenue will increase by 10%-11% year-over-year in the third quarter of fiscal 2024.
Intuit investors also receive a dividend for holding onto shares. While a 0.55% dividend yield is low, the financial firm has a high growth rate. The quarterly dividend recently increased from $0.78 per share to $0.90 per share. That’s a 15.4% year-over-year growth rate.
On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
