7 Stocks Worth Buying When They’re Down – Investorplace.com

We are now more than halfway through earnings season, and the broad takeaway has been largely bullish for stocks to buy. Long story short, first-quarter earnings were expected to be really bad due to slowing economic growth. But, they’ve actually been much better than expected, and second-quarter guides have been very strong, too. Overall, stocks are broadly rallying to all-time highs.

But, this wasn’t the case for every stock in the market. Instead, there were a handful of stocks that reported not-so-great first quarter numbers, and consequently dropped against the backdrop of market surging to new highs.

Some of these stocks deserved to drop. Others, not so much. Indeed, there were are a handful of stocks which dropped big this earnings season that, quite frankly, shouldn’t have dropped.

That makes for an interesting and compelling buy the dip situation. Stocks are red hot right now. Some aren’t. Time to buy the dip in the ones that aren’t, but should be?

Perhaps. With that in mind, let’s take a look at seven “buy the dip” stocks worth considering here and now.

Buy the Dip Stocks Worth Considering: Chegg (CHGG)

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Shares of digital education giant Chegg (NYSE:CHGG) dropped big after the company reported first quarter earnings and revenue beats, but guided below consensus estimates for second quarter and full year 2019 revenue.

This big drop simply doesn’t make much sense in the big picture. Sure, the second quarter and full-year revenue guides were weaker than expected. But, they were below the consensus estimate by less than 0.5%, and Chegg has developed a reputation for under-promising and over-delivering. As such, when all is said and done, revenues will likely come in well ahead of expectations, and this down-guide will be long forgotten old news.

Further, all the growth metrics at Chegg remain rock solid. Revenue growth remains robust (north of 25%), the high margin Services business continues to ramp (34% growth), and margins continue to expand (EBITDA margins up 280 basis points in the quarter). So long as those growth metrics remain healthy, Chegg will remain on a long term winning trajectory towards becoming a very important, very valuable digital education company that investors should own for the long haul.

IRobot (IRBT)

Tariffs Won't Kill iRobot, but IRBT Stock Is About to Get Cheap

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Shares of consumer robotics giant iRobot (NASDAQ:IRBT) dropped huge after the company reported first quarter numbers which missed on revenue estimates and included a worrisome slowdown in top-line growth trends.

But, as investors know, a single quarter isn’t a trend, it’s a data point. Sure, the Q1 revenue growth data-point was weak. But, in the big picture, automation is happening everywhere, including on the consumer household products front.

On that front, iRobot is the runaway leader, providing robotic vacuum and pool cleaners. This growth narrative is just getting started. Adoption of robotic vacuum cleaners will continue to rise over the next several years. iRobot will simultaneously release new products, like a robotic lawnmower. A whole consumer robotics revolution will play out, and iRobot’s revenues and profits will soar higher.

In that big picture, a quarterly revenue miss in a quarter that doesn’t carry much weight, is rather meaningless. As such, investors should take advantage of the recent plunge in IRBT stock.

Intel (INTC)

Intel Stock Rally Isn't Over: Here's Why Prices Above $50 Make Sense

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Semiconductor giant Intel (NASDAQ:INTC) dropped sharply this earnings season after the company reported dour first quarter numbers that included an ugly second quarter guide and big cut to the full year 2019 guide.

Behind the scenes, the global semiconductor market continues to struggle with falling demand and rising supply. Intel’s bad Q1 numbers and ugly Q2 guide speak to this. But, over the next several months and quarters, demand should come back into the picture as the global economy finds its footing.

Concurrently, supply should drop as players in the market more aggressively focus on discounting to clear inventory. Net net, by the end of 2019, the global semiconductor market should be a lot healthier than it is today.

Intel is one of the biggest players in that market. As such, as the global semiconductor market improves from here into the end of the year, Intel stock should rise, too, making this dip look like a solid buying opportunity.

Alphabet (GOOG)

Here's How Amazon Could Become A Real Threat To Alphabet Stock

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Digital search and cloud computing giant Alphabet (NASDAQ:GOOG) had its worst day since 2012 this earnings season after the company reported first quarter numbers that pointed to a worrisome slowdown in the company’s digital ad business.

Namely, Alphabet reported its weakest digital ad and overall revenue growth rate in several years, and this continues what has been a multi-quarter downtrend in the company’s ad growth rates. To make matters worse, Alphabet reported those numbers against the backdrop of its peers — Facebook (NASDAQ:FB), Twitter (NYSE:TWTR), and Snap (NYSE:SNAP) – all reporting pretty good usage and digital ad numbers this past quarter. Consequently, investors walked away from Alphabet’s Q1 earnings concerned about the company’s competitive positioning in the digital ad market.

Such concerns are warranted. Alphabet will lose digital ad market share over the next several years as competition continues to ramp. But, the whole digital ad market is growing, and Alphabet will remain king in that market because digital search is and will remain the backbone of the internet.

Further, margins are showing signs of bottoming, the cloud business remains hot, and Waymo has yet to make a financial impact. In other words, there is still a lot of long term growth firepower left here, and that makes this dip in GOOG stock look more like an opportunity than anything else.

Twilio (TWLO)

Avoid Twilio Stock As Long As Valuations Remain Stratospheric

After reporting a clean double-beat-and-raise quarter, Twilio (NASDAQ:TWLO) stock actually dropped more than 5% in response as investors basically said the numbers weren’t good enough.

That’s fair. This is a richly valued hyper-growth stock that’s been on an absolute tear. Against that backdrop, Twilio needs to not only smash expectations, but also deliver far above-consensus guides, and keep doing that over and over again, in order for TWLO stock to stay in rally mode. That’s a tall order. As such, it’s not surprising to see some profit takers here.

But, Twilio will continue to impress with consistent beat-and-raise reports over the next several years, mostly because this company is the unrivaled leader in the secular growth Communication-Platforms-as-a-Service (CPaaS) market, which is currently tiny relative to what it will be in five to ten years.

As such, secular growth drivers will keep TWLO stock on a long term uptrend, and ultimately turn most dips in this stock into buying opportunities.

Spotify (SPOT)

Spotify Stock spot stock

Source: Spotify

Music streaming giant Spotify (NYSE:SPOT) had a rough first quarter earnings season. The company beat on its most important metric, premium subscribers. They also announced above-consensus revenues for the quarter, and delivered a healthy guide. But, SPOT stock dropped in response.

Why? A profit miss and slowing ad revenue growth. Neither of those concerns really hold water in the big picture. The profit miss is more a function of spending to grow, which is working, since premium subscriber growth remains north of 30%. The more important trend to watch is margins. Margins do continue to improve with scale. Meanwhile, slowing ad revenue growth is largely meaningless. The Spotify growth story is about premium subs, not ad-supported subs. Premium revs account for roughly 90% of this company’s business. Ad revs are the other 10%. Thus, a slowdown in the ad business isn’t all that meaningful, especially considering Premium revenue growth accelerated in the quarter.

Overall, then, Spotify actually reported pretty strong first quarter numbers. The stock just dropped in response to unnecessarily short-sighted concerns. Through the rest of the year, subscriber, revenue, and margin growth will remain robust. Today’s concerns will fade away. SPOT stock will move higher.

As of this writing, Luke Lango was long CHGG, IRBT, INTC, GOOG, FB, TWLO and SPOT.

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SKY – Skyline (SKY) Tops Q1 Earnings and Revenue Estimates

Skyline (SKY Quick QuoteSKY – Free Report) came out with quarterly earnings of $0.75 per share, beating the Zacks Consensus Estimate of $0.56 per share. This compares to earnings of $0.22 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 33.93%. A quarter ago, it was expected that this manufactured and modular housing maker would post earnings of $0.36 per share when it actually produced earnings of $0.61, delivering a surprise of 69.44%.Over the last four quarters, the company has surpassed consensus EPS estimates four times.Skyline, which belongs to the Zacks Building Products – Mobile Homes and RV Builders industry, posted revenues of $510.2 million for the quarter ended June 2021, surpassing the Zacks Consensus Estimate by 14.48%. This compares to year-ago revenues of $273.29 million. The company has topped consensus revenue estimates four times over the last four quarters.The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.Skyline shares have added about 85.5% since the beginning of the year versus the S&P 500’s gain of 16.8%.What’s Next for Skyline?While Skyline has outperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.Ahead of this earnings release, the estimate revisions trend for Skyline was mixed. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.43 on $417.25 million in revenues for the coming quarter and $1.88 on $1.73 billion in revenues for the current fiscal year.Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Building Products – Mobile Homes and RV Builders is currently in the top 4% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

PRIM – Primoris Services (PRIM) Lags Q2 Earnings and Revenue Estimates

Primoris Services (PRIM Quick QuotePRIM – Free Report) came out with quarterly earnings of $0.68 per share, missing the Zacks Consensus Estimate of $0.69 per share. This compares to earnings of $0.68 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -1.45%. A quarter ago, it was expected that this construction contractor would post a loss of $0.09 per share when it actually produced earnings of $0.32, delivering a surprise of 455.56%.Over the last four quarters, the company has surpassed consensus EPS estimates three times.Primoris Services, which belongs to the Zacks Building Products – Heavy Construction industry, posted revenues of $881.61 million for the quarter ended June 2021, missing the Zacks Consensus Estimate by 3.25%. This compares to year-ago revenues of $908.22 million. The company has topped consensus revenue estimates two times over the last four quarters.The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.Primoris Services shares have added about 7.2% since the beginning of the year versus the S&P 500’s gain of 16.8%.What’s Next for Primoris Services?While Primoris Services has underperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.Ahead of this earnings release, the estimate revisions trend for Primoris Services was mixed. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.84 on $1.03 billion in revenues for the coming quarter and $2.40 on $3.74 billion in revenues for the current fiscal year.Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Building Products – Heavy Construction is currently in the top 27% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

DEI – Douglas Emmett (DEI) Beats Q2 FFO and Revenue Estimates

Douglas Emmett (DEI Quick QuoteDEI – Free Report) came out with quarterly funds from operations (FFO) of $0.47 per share, beating the Zacks Consensus Estimate of $0.44 per share. This compares to FFO of $0.41 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of 6.82%. A quarter ago, it was expected that this real estate investment trust would post FFO of $0.43 per share when it actually produced FFO of $0.44, delivering a surprise of 2.33%.Over the last four quarters, the company has surpassed consensus FFO estimates three times.Douglas Emmett, which belongs to the Zacks REIT and Equity Trust – Other industry, posted revenues of $225.01 million for the quarter ended June 2021, surpassing the Zacks Consensus Estimate by 3.17%. This compares to year-ago revenues of $207.8 million. The company has topped consensus revenue estimates two times over the last four quarters.The sustainability of the stock’s immediate price movement based on the recently-released numbers and future FFO expectations will mostly depend on management’s commentary on the earnings call.Douglas Emmett shares have added about 12.7% since the beginning of the year versus the S&P 500’s gain of 16.8%.What’s Next for Douglas Emmett?While Douglas Emmett has underperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s FFO outlook. Not only does this include current consensus FFO expectations for the coming quarter(s), but also how these expectations have changed lately.Empirical research shows a strong correlation between near-term stock movements and trends in estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of estimate revisions.Ahead of this earnings release, the estimate revisions trend for Douglas Emmett was mixed. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus FFO estimate is $0.45 on $222.51 million in revenues for the coming quarter and $1.79 on $887.11 million in revenues for the current fiscal year.Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, REIT and Equity Trust – Other is currently in the bottom 35% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

BRY – Berry Petroleum (BRY) Reports Q2 Loss, Misses Revenue Estimates

Berry Petroleum (BRY Quick QuoteBRY – Free Report) came out with a quarterly loss of $0.08 per share versus the Zacks Consensus Estimate of a loss of $0.07. This compares to earnings of $0.06 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -14.29%. A quarter ago, it was expected that this independent upstream energy company would post earnings of $0.01 per share when it actually produced earnings of $0.07, delivering a surprise of 600%.Over the last four quarters, the company has surpassed consensus EPS estimates just once.Berry Petroleum, which belongs to the Zacks Oil and Gas – Integrated – United States industry, posted revenues of $99.25 million for the quarter ended June 2021, missing the Zacks Consensus Estimate by 9.17%. This compares to year-ago revenues of $33.45 million. The company has not been able to beat consensus revenue estimates over the last four quarters.The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.Berry Petroleum shares have added about 52.5% since the beginning of the year versus the S&P 500’s gain of 16.8%.What’s Next for Berry Petroleum?While Berry Petroleum has outperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.Ahead of this earnings release, the estimate revisions trend for Berry Petroleum was favorable. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.16 on $134.37 million in revenues for the coming quarter and $0.32 on $498.7 million in revenues for the current fiscal year.Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Oil and Gas – Integrated – United States is currently in the top 17% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.