The majority of securities trading in trading in the U.S. stock market have experienced months of solid gains in a matter of several days. Since July 16, the stock market has tumbled, with a slight recovery in the last couple of days. At one point, the S&P 500 had fallen by 9%, and the Nasdaq had dropped by 13%.
Investors have been mainly fleeing large-market-cap stocks that are overvalued following a much lower-than-expected job report for July and fears that the Federal Reserve has waited too long before it drops interest rates. With global markets tumbling, it’s difficult for most investors to decide the best use of capital now.
Below, I discuss three stocks that offer investors potential upside after the recent stock market sell-off and could provide solid returns due to their fair valuation and the recent dip in share price.
M/I Homes (MHO)
M/I Homes (NYSE:MHO) is a homebuilding company that primarily constructs single-family homes throughout the eastern and southern United States in locations such as Texas, Florida, Minnesota, Ohio, Michigan, and Indiana. It also provides mortgage and closing services for home buyers.
Over this past year, its star price has increased by 45% and has recently dipped by 13% since the end of July, which may be a buying opportunity for investors.
It trades at a fair valuation, with its forward P/E ratio of 7.38, while the sector average is 15.03.
On July 30, M/I Homes reported earnings for the second quarter of 2024, stating that total revenue increased by 9% and net income rose by 24% to $147 million year-over-year. Total home deliveries also grew by 12%, and it was reported that approximately $50 in share repurchases took place during the second quarter of 2024.
MHO provides investors with potential upside following an earnings beat and the recent dip in its share price due to investor fears surrounding the overall state of the economy.
GigaCloud Technology (GCT)
GigaCloud Technology (NASDAQ:GCT) is a B2B e-commerce business that primarily distributes large merchandise such as gym equipment, furniture, and appliances.
Over the past year, its share price has more than doubled, but within the last month, it has fallen by 29%, even following a strong earnings report.
On August 6, it reported earnings for the second quarter of 2024, in which it stated that total revenue had more than doubled, and net income rose by 47% to $27 million compared to the previous year. Total active buyers and spending per buyer rose by 67% and 8%, respectively, compared to the same time period.
GigaCloud Technology is also trading at a decent valuation. Its forward P/E ratio is 7.54, while the median for its sector is 16.49.
GCT offers a substantial buying opportunity. Although its share price has been oversold by investors recently, with its solid earnings and customer growth, it could continue to provide the potential for share price appreciation.
SkyWest (SKYW)
SkyWest (NASDAQ:SKYW) operates as a regional airliner that provides passenger and cargo transport services among its fleet of approximately 500 aircraft.
On July 25, SkyWest reported earnings results for the second quarter of 2024, stating that the total increased by 19%, and net income rose by 80% to $76 million year-over-year.
SkyWest offers a solid buying opportunity. It is also somewhat of an anomaly within the passenger airline industry, which most investors are hesitant to invest in. Its share price growth far outpaces any other airline stock over this past year. Its share price has risen by 71% over this past year, and within the last month, it has fallen by 13%.
SKYW is trading at a fair valuation, with a forward P/E ratio of 10.59, while the sector median is 18.48.
It could be the right time for investors to add to their positions or start a position in SkyWest due to its recent history of earnings beats and strong share price appreciation. Surprisingly, its valuation also leaves room for considerable growth. Following the dip in the market, this would be a solid pick-up for any investor.
As of this writing, Noah Bolton did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
