3 Strong Buy Stocks To Grab On The Dip

Although Wall Street has evolved significantly over the past few years, several traditional investing philosophies have prevailed. Out of these, perhaps none have witnessed the level of fanaticism that is felt by the infamous “Buy the dips” strategy.

The “Buy the dips” strategy is exactly what it sounds like: following a significant drop in the price of a stock, bullish investors will scoop up shares at what they believe is a discount. The philosophy works because short-term price volatility is oftentimes not indicative of the long-term health of a company, especially in an overall bull market.

What’s more, investors can apply the “Buy the dips” philosophy when using the Zacks Rank because the Zacks Rank is entirely unaffected by recent price action. While the Momentum category of our Style Score system does grade stocks based on their latest movement, the Zacks Rank emphasizes earnings estimates and earnings estimate revisions to find stocks that are likely to outperform the market over the next one-to-three months.

With that said, we’ve identified several stocks that investors should consider buying on the dip right now. All of these stocks have slumped a bit over the past four weeks, but their fortunes could be poised to change soon, as they are all currently sporting a Zacks Rank #1 (Strong Buy). Check them out now:

1. Craft Brew Alliance ( (NASDAQ:BREW) )

After a strong post-earnings surge, shares of Craft Brew Alliance have lost some of their momentum. In fact, this maker of specialty beer has slipped over 5% in the past month. Nevertheless, the company remains an exciting growth prospect in one of Wall Street’s hottest industries.

Indeed, our “Beverages – Alcohol” group has gained more than 23% year-to-date and is currently in the top 8% of the Zacks Industry Rank. Furthermore, our current consensus estimates are calling for Craft Brew Alliance to post EPS growth of 350% this fiscal year. On top of all this, the stock has a beta rating of just 0.50, which means it’s hypothetically less volatile than the market average.

2. Aaron’s ( (NYSE:AAN) )

Despite its relatively unique rent-to-own business model, Aaron’s has not been immune from the recent retail sell-off. In fact, the stock has been slipping ever since its recent earnings beat and is down roughly 11% over the past four weeks. However, shares have actually soared more than 50% over the past year, and many investors would still consider Aaron’s to be a great value pick.

Aaron’s has surpassed the Zacks Consensus Estimate in five-straight quarters. Also, the stock is trading with a P/E ratio of just 16.62 and a P/S ratio of 0.94. Additionally, we’ve seen six positive revisions to the company’s current year and next year earnings estimates within the past 60 days, indicating that analysts are also optimistic about the company’s future.

3. PetMed Express ( (NASDAQ:PETS) )

At one point this year, shares of online pet supplies marketplace PetMed Express were up over 100%. But over the past few weeks, the stock has dropped over 16% as the company grapples with a unique PR problem: allegations that it has sold prescription animal drugs to human opioid addicts.

However, the particular drugs in question remain a very low percentage of PetMed’s total sales, and we’ve yet to see an analyst response to these issues. In fact, we’ve seen three positive revisions to its current quarter earnings estimates, as well as two for its next year estimates, within the past 60 days.

Overall, our current consensus estimates are calling for EPS growth of 20% and sales growth of 6.5% this year. The company is also growing its cash pile by 18% this year, and its net margin and RoE significantly outpace the industry averages.

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