There are plenty of great stocks to buy on the dip right now. The market volatility that has been ongoing since July, coupled with overreactions to second-quarter financial results, have pushed the share prices of some great companies down to attractive levels. Investors brave enough to take a position now are likely to be rewarded with future gains.
While the market might remain volatile in the near-term and further declines could be forthcoming, it would still be a good idea to start a position in stocks of strong companies and gradually increase that position on any further weakness in the share price. Many stocks have fallen recently despite posting strong quarterly prints as investor expectations and valuations have gotten overly optimistic.
Here are three smart stocks to buy on the dip in August.
e.l.f. Beauty (ELF)
e.l.f. Beauty (NYSE:ELF) just reported blowout second-quarter financial results and its stock fell 15%, presenting a great buying opportunity. The cosmetics retailer also raised its forward guidance, but not enough to appease investors, sending the share price sharply lower. But make no mistake, e.l.f. Beauty remains a strong growth stock. The company announced Q2 EPS of $1.10 compared to 84 cents expected on Wall Street. Revenue of $324 million beat expectations for $305 million. Sales rose 50% year-over-year (YOY).
e.l.f. Beauty raised its guidance for the remainder of the year, saying it now expects sales of $1.28 billion to $1.30 billion, and earnings of $3.36 to $3.41 a share. Unfortunately, the guidance left Wall Street wanting more. Analysts had sales of $1.30 billion penciled in for the company and were looking for full-year earnings of $3.42 a share. e.l.f. Beauty sells its products mostly online and is popular with Gen Z and Gen Alpha consumers. The company markets its products on popular social media sites such as TikTok.
During their earnings call, management said that they are not worried about a consumer pullback in the beauty category and remain optimistic about the remainder of 2024. Investors shouldn’t worry either and should buy-the-dip in ELF stock, keeping in mind that the share price has risen 825% in the last five years.
Taiwan Semiconductor Manufacturing (TSM)
Taiwan Semiconductor Manufacturing (NYSE:TSM) stock has been dragged lower by the rotation out of technology names. While TSM stock has recovered some recently, its share price is down 10% since the start of July. Yet all indications are that the company’s business fabricating microchips and processors is booming. In fact, the company just reported a 45% YOY increase in its July sales as demand for artificial intelligence (AI) microchips accelerates.
Sales during July totaled $7.9 billion. Revenue from January through July of this year increased 31% compared with the same period of 2023, said the company. Taiwan Semiconductor produces about 75% of all the microchips and semiconductors in the world. It has raised its forward guidance several times this year as orders to fabricate AI chips grow. Taiwan Semiconductor is currently forecasting full-year revenue growth of about 25%.
The company is scheduled to report its next quarterly financial results in mid-October and expectations are for a blockbuster print, making now a good time to buy TSM stock on the dip. In the last 12 months, Taiwan Semiconductor stock has gained 78%.
Restaurant Brands International (QSR)
Restaurant Brands International (NYSE:QSR) recently posted mixed financial results for this year’s second quarter. But the numbers show that good things are happening at the company. Q2’s EPS of 86 cents only slightly missed Wall Street’s target of 87 cents. Revenue of $2.08 billion surpassed estimates of $2.02 billion. Sales at the company, which owns Burger King, Firehouse Subs, Popeyes and Tim Hortons, were up 17% YOY.
Overall, same-store sales across Restaurant Brands portfolio increased 1.9% during Q2. International locations operated by Restaurant Brands saw same-store sales growth of 2.6%. Same-store sales at Tim Hortons grew 4.6% while same-store sales rose 0.5%. That was partially offset by sales declines of 0.1% for both Burger King and Firehouse Subs. The company is in the midst of a multi-year turnaround strategy at Burger King that is starting to produce results.
In June of this year, Restaurant Brands International acquired Popeyes China, the franchise network in the nation of 1.4 billion people. Popeyes China will be included in Restaurant Brands next quarterly financial results. QSR stock is down 9% this year and a solid option among stocks to buy on the dip.
On the date of publication, Joel Baglole 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
