Dips Don't Last: 5 Stocks Worth Buying

Market dips don't last forever.

Right now, we're 4 years into one of the strongest bull markets in history. And when a market like this pulls back, the best companies get dragged down right alongside the junk. The difference is simple, the junk stays down. The quality snaps back.

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So here are 5 stocks worth buying while they're still marked down, 5 businesses whose fundamentals never broke, even as their share prices took a step back. Every one came straight out of our Zen Ratings quant model. And the single biggest bargain of the bunch is saved for last, so stick around to the end.

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1- Avient (AVNT)

Let's get the party started with a quietly excellent materials company in Avient (AVNT).

Avient makes the specialized plastics, colorants, and additives that go into everything from packaging to medical devices to defense gear. Unglamorous, and absolutely everywhere.

So why Avient, and why now? Because shares have pulled back about 15% off their highs. All the while, the business keeps executing. Earnings grew 20% in the most recent quarter, and shares have now beaten Wall Street's estimate 5 quarters in a row, which tends to point to more beats ahead.

On top of that, it's a bargain. Avient trades at a PEG ratio of just 0.62. Quick gloss: PEG is the price-to-earnings ratio adjusted for growth, and under 1 means you are not overpaying for that growth. The average stock sits around 1.5, so Avient could more than double from here and still be cheaper than the average stock.

Wall Street coverage is thin, just 2 analysts are rating shares. Both are firmly on board with Strong Buy recommendations, and their fair value targets point to as much as 22% upside in the year ahead. Thin coverage is an opportunity, as more analysts wake up, each new Buy recommendation is a fresh catalyst.

Now let's pop the hood with our Zen Ratings quant model. Here's how it works: every stock gets analyzed across 115 different fundamental, technical, and AI factors, then boiled down to a simple letter grade from A through F. We also break out 7 unique Component Grades, Value, Growth, and more, to show off each stock's strengths and weaknesses.

Here's something worth flagging: since this breakdown was put together, Avient's Zen Rating has cooled slightly. It now earns a B, a Buy recommendation, still landing in the top 5% of every stock we track.

Walk the strong grades: Sentiment lands in the top 21% of the market, a touch better than it first looked, with Momentum right behind at top 25%, the Smart Money crowd moving into shares. Value comes in at the top 22%. Growth, the top 18%, which foreshadows more earnings beats ahead. And the standout, Safety, the top 11%, a sign of steady, predictable earnings and low drama. All in all, a cheap, dependable, well-run company on sale, even with that headline grade ticking down a notch. 

That's a fine, low-drama way to open the list. But if Avient's the steady one, the next pick is the opposite, a lot more horsepower under the hood.

2- Tutor Perini (TPC)

Now let's shift into a higher gear with Tutor Perini (TPC).

Tutor Perini is one of the biggest heavy-construction firms in the country, they build the tunnels, bridges, transit systems, and mega-projects that take years and billions to finish.

And here's why now. Shares have pulled back about 17% off their highs. Their most recent quarter was a blowout. Earnings nearly doubled what Wall Street was looking for.

Here's the engine behind it. Tutor Perini spent the last few lean years winning a mountain of new contracts, and now all that work is finally converting into real earnings, right as the company hits its best years.

And you can still buy it cheap. The PEG ratio stands at 0.58x. Anything under 1 is undervalued, and here we're already in deeply undervalued territory.

On the analyst side, Wall Street is almost asleep at the wheel here, just 1 analyst formally covers shares. But that one analyst, over at UBS, ranks in the top 11% of all Wall Street stock-pickers, and carries a Strong Buy recommendation with a fair value target implying around 25% upside in the year ahead.

Under the microscope of our Zen Ratings, this is another A-rated stock, a Strong Buy recommendation, in the top 3% of the entire market.

Walk the strengths. Financial strength comes in at the top 20%. Sentiment is actually stronger than it first looked, at the top 11%, the Smart Money moving in. Safety, the top 10%. And the standout, Growth, the top 5% of all stocks. For a company converting a huge backlog into profits, that is exactly the grade you want leading the way. And none of that strength cracked when shares pulled back, the company kept winning work and beating estimates. It was the price that took a breather, not the business.

The biggest negative for Tutor Perini is the lumpy nature of big construction, giant projects can run into disputes and legal claims, and that comes with the territory. But with a pipeline this full, the direction is clearly forward.

Tutor Perini is one of the names held in our Zen Investor portfolio, a beaten-down builder with its best years dead ahead. Now, from steel and concrete, let's swing to something completely different, and to the cheapest high-quality name on this entire list.

3- Jazz Pharmaceuticals (JAZZ)

Next up is a fantastic growth-and-value play in Jazz Pharmaceuticals (JAZZ).

Jazz is a profitable, diversified biopharma company, real drugs generating real cash across sleep disorders, epilepsy, and a fast-growing cancer franchise. It's a profitable cash machine, with real products and real cash flow.

And here's why now. Shares have slipped about 13% off their highs, which has handed one of the best bargains in the whole market.

Jazz's oncology arm is the engine, their newer cancer therapies keep expanding into more uses, and that is where the growth is coming from. This explains why Wall Street experts see earnings growing about 24% a year in the year ahead, more than double the pace of the broader biotech industry.

Growth is nice. But growth plus value is much, much nicer. Jazz carries a PEG ratio of just 0.63, meaning shares could nearly double from here and still be cheaper than the average stock at 1.5.

In fact, based on an internal discounted cash flow model, Jazz is trading around 56% below fair value estimate, as of this writing.

And Wall Street is pounding the table. Out of 18 analysts covering shares, 13 hand out a Strong Buy and 4 more a Buy recommendation, that is about as bullish as Wall Street gets. Their fair value targets run as high as 45% above where shares trade today, as of this writing.

Here's another one worth flagging: Jazz's Zen Rating has also cooled a touch since this was drafted. It now earns a B, a Buy recommendation, still in the top 5% of all stocks.

Walk the strengths with me. Safety, the top 24%. Our AI grade is actually more middling than it first looked, around the top 29%, and that grade measures the likely future timeliness of shares, not how much artificial intelligence the company sells. Growth lands at the top 14%, with Momentum close behind at the top 19%. Financial strength, the top 7%, operational excellence that shows up again and again in future earnings. Growth and Financial strength together are the 2 most vital grades that point to future outperformance. And the crown jewel, Value, the top 1% of the entire market, based on 21 different value measures. The one real soft spot is Sentiment, all the way down in the bottom 14%, which is part of why the overall grade eased from where it stood before. Even so, this is cheap, profitable, fast-growing, and graded well above average overall, a rare combination even with that one weak link.

One risk is that Jazz still leans heavily on a handful of key drugs, so a stumble in any one of them could weigh on growth.

Jazz Pharmaceuticals might be the right prescription for your portfolio. Now, the next pick took the ugliest kind of beating this past year. And it just came roaring back.

4- Darling Ingredients (DAR)

That brings us to a genuine turnaround in Darling Ingredients (DAR).

Darling is the world's largest recycler of animal byproducts and used cooking oil, they turn waste into valuable ingredients, and, through a big joint venture, into renewable diesel.

Here's why now. Shares are trading about 14% off their highs, after a rough stretch when renewable diesel margins got crushed. But those margins have snapped back hard, and the earnings recovery is stunning. Once new federal fuel rules were finalized this spring, Darling's diesel profits came roaring back.

Last quarter, earnings beat the stuffing out of Wall Street's number, coming in more than 70% above the estimate.

And even after the rebound, shares are still reasonable. Darling trades at a PEG ratio of 1.24, not dirt cheap, but a classic GARP story, Growth At A Reasonable Price, still sitting below the market's 1.5 average.

On the analyst front, 8 cover shares and they land on a Strong Buy consensus, 5 Strong Buy and 2 Buy recommendations. Their fair value targets run as high as roughly 45% above today's price, and the most bullish call comes from an analyst in the top 5% of the entire Street.

Our Zen Ratings love it too, an A, a Strong Buy recommendation, in the top 1% of all stocks, even stronger than first estimated. Beating out 99% of the market, it may be fair to call this an A-plus. And that grade matters, A-rated stocks have historically trounced the market by nearly 3 to 1.

Walk the strengths. Safety, the top 19%. Growth, the top 19%. Financial strength, the top 12%, real operational muscle. Value, the top 11%. And the standout, Sentiment, the top 8% of the market, the Smart Money crowd piling into shares. On a stock that just pulled back, that is exactly what you want to see, the smart money buying the dip right alongside everyone else. All in all, a beaten-down business the smart money is already circling back to.

The main risk here is that Darling's fuel business rides on renewable diesel margins, and those swing with government policy and commodity prices. But with the rules now set and margins recovering, the wind is at its back.

A real turnaround still available at a discount, one to keep firmly on the radar. Which brings us to the biggest bargain of them all.

If you want to stay one step ahead of the market, join our Live training every Monday, where we share an updated market outlook and trading plan to outperform, plus a Trade of the Week based on our proven Zen Ratings quant model. It's a free event, but you do need to register at wallstreetzen.com/live. And even if you can't join live, it's still worth signing up, since a replay goes out to all registrants to watch whenever is convenient.

5- Progyny (PGNY)

This final pick fell 23% from its highs, yet just landed one of the largest public pension systems in America as a client, is buying back its own shares hand over fist, and grades in the top 2% of the entire market for financial strength. That company is Progyny (PGNY).

Progyny runs fertility and family-building benefits for big employers, when a company wants to offer its people world-class fertility coverage, Progyny is who they call.

And here's why now. This is the deepest discount on the list, shares are a full 23% off their highs.

And that's happening even as the business keeps winning. They just signed CalPERS, one of the largest pension systems in America, and exactly the kind of name that gets other big employers to follow, and they've been buying back their own shares hand over fist. Meanwhile, Wall Street experts see earnings growing almost 27% a year in the year ahead, well ahead of Progyny's industry.

And it is deeply undervalued. Based on a discounted cash flow model, Progyny is trading around 62% below fair value estimate, as of this writing.

That's not the only metric showing it's undervalued. It has a PEG ratio of 0.97, still under 1 and well below the market's 1.5 average.

The analysts are on board too. 10 cover shares, landing on a Strong Buy consensus with 7 Strong Buy recommendations, and their fair value targets run as high as roughly 60% above today's price, as of this writing.

Our Zen Ratings make this another A, a Strong Buy recommendation, in the top 4% of the market.

Walking through the Component Grades: Value, the top 24%. Safety, the top 12%. Growth, the top 11%. And the standout, towering over the rest, Financial strength, the top 1% of every stock we track. That is operational excellence that shows up time and again in future earnings reports.

One thing to watch is that Progyny depends on landing and keeping big employer contracts, lose a large one, and it stings. But signing CalPERS tells you the wins are still very much coming.

The deepest dip on the list, the strongest balance sheet of the bunch, and a fresh marquee client, all while the price is marked down. Progyny might deserve a place in your portfolio, because dips like this one rarely last.

Closing

So there are the 5 stocks worth buying while they're down: Avient, Tutor Perini, Jazz Pharmaceuticals, Darling Ingredients, and Progyny. 5 quality businesses the market knocked back, and every one still rated a Buy or better by our model. And the thing about good companies on sale, that discount doesn't tend to stick around for long.

You can pull a free rating on over 4,600 stocks yourself, just by typing in a ticker at wallstreetzen.com. The Zen Ratings update daily, so check them before any buy, hold, or sell decision, and bookmark the site while you're there.

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