When markets experience a downturn, and stock prices go down, smart traders start thinking of deals to make. However, picking the right stock to buy is a challenging task. But how do you know which ones are likely to bounce back? Empire stock investor is among the top renowned platforms offering monthly stock picks, bonus reports, trade alerts, and more. With that in mind, we have identified the top three cheap and high-quality stocks that have fallen with significant stock indexes recently. Each company has a history of growing Earnings Per Share (EPS) and revenues, and analysts expect similar growth in the year 2023.
United Microelectronics Corporation (UMC)
UMC is one of the world’s largest and most productive semiconductor foundries. It supplies clients like Intel, RealTek, Texas Instruments, and Qualcomm with microprocessor components. Its high-value score of A makes it a good pick for value investors. Over the last ten years, United Micro Electric Corporation has experienced drops of 30% to 50% in the previous ten years. These pullbacks are the best entry points to purchase the dip. Since 2016, the company has been increasing its revenues and EPS yearly. In addition, the company has recorded an average of three years of annual growth rates of 169% and 20.4%, respectively.
Analysts expect an annual growth rate of around 34% of Earnings Per Year in the next five years. The company pays a good dividend, which should add to the list of reasons you should buy this stock.
TopBuild Corp (BLD)
TopBuild is a company that provides insulation services. In addition, it gives fireproofing, paint, gutters, garage doors, and fireplaces. Over the last three years, the company has increased its revenue and Earnings Per Year at an average annual rate of 38.9% and 19.2%, respectively. BLD has had 30%, sometimes going as far as more than 50% pullbacks. This has worked out well for most investors. Due to the expected higher growth rate, the company’s forward E/P is 10, slightly higher than Builder’s first source. Note that, over the last five years, BLD’s P/E has been between 8.1 and 42.1. This means that the forward P/E of 10 represents a good value since it’s at the lower end.
The company does not pay a dividend.
Asbury Automotive Group Inc. (ABG)
Asbury Automotive Group is a company that operates multiple dealerships in 15 states. They sell cars and provide insurance products and third-party auto loans. Asbury Automotive Group is trading around 26%, below its 2022-all-time high. While the stock dropped by almost 70% in the 2020 market meltdown, its 25% pullbacks have provided an excellent platform to get the dip. Asbury has raised its EPS and revenues continuously since the year 2016. Records show that with an average of three years, the annual growth rate has been between 53.6% and 22.6%, respectively.
Analysts expect an annual EPS growth rate of 18.5% in the next five years. Currently, this $3.3 billion worth company has a price-to-earnings (P/E) ratio of 4.8% and an expected forward P/E of 4.9%. This is low for a growth stock, making it an attractive target for investors.
Asbury Automotive Group Inc. does not pay a dividend.
Methodology
The stocks listed above were selected using strict criteria. They meet the following requirements;
- They sustained the annual EPS growth.
- They suffered the average annual revenue growth.
- They Sustained yearly EPS gains.
- They had zero negative earnings over the last five years.
- They met the expected forward EPS estimates.
- They have experienced a recent price drop.
Final Thoughts
As an interested investor, the above stocks are worth investing in 2023. When purchasing the dip, consider when to purchase and when to exit. This is regardless of whether the dip rises or drops.
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