Similarly, small-cap shares on Wall Street have not participated in the rally as much either. However, these declines may be temporary, offering a chance to capitalize on undervalued companies with strong rebound potential. With that information, we explore three stocks to buy on the dip that are prime candidates for a summer rebound.
Global Payments (GPN)
First up on our list of stocks to buy on the dip is Global Payments (NYSE:GPN), which provides payment technology and software solutions. The company operates through three primary segments: Merchant Solutions, Issuer Solutions, and Business and Consumer Solutions.
In the first quarter of 2024, Global Payments reported adjusted net revenue of $2.18 billion, marking a 6.6% year-over-year (YoY) increase. Adjusted net income rose 5.6% to $666.5 million. Meanwhile, the adjusted earnings per share (EPS) surged by 8% YoY to $2.59. The company attributed this growth to strong execution across its businesses and resilient consumer trends despite the uncertain macroeconomic environment.
The payment solutions company has seen significant growth in its business-to-business (B2B) segment. Significantly, the MineralTree business achieved a 30% increase in new bookings during the first quarter. This figure includes a nearly 60% improvement in new virtual card bookings as adoption continues to accelerate.
So far in 2024, GPN stock has tumbled more than 20%. As a result, the shares are trading at an attractive value of 8.5 times forward earnings and 2.6 times sales. Meanwhile, analysts have a 12-month price target of $150 for GPN, signaling over a 50% upside.
Estee Lauder (EL)
Beauty industry behemoth Estee Lauder (NYSE:EL) is the next name on our list of stocks to buy on the dip. The company is renowned for its high-quality skincare, makeup, fragrance, and hair care products. Its brands include La Mer, Clinique, Tom Ford Beauty, and Jo Malone London.
In early May, Estee Lauder posted strong financial results for the third quarter of fiscal 2024. Net sales grew 5% to $3.94 billion compared to the prior-year period. Organic sales rose nearly 6% YOY, driven by double-digit growth in the Europe, the Middle East & Africa (“EMEA”) region. Adjusted operating income surged 75% YOY to $554 million. Meanwhile, adjusted constant currency EPS jumped 117% to reach $1.02.
In late April, Estee Lauder and Microsoft (NASDAQ:MSFT) announced the creation of an AI Innovation Lab. This collaboration leverages the cutting-edge generative artificial intelligence (Gen AI) capabilities of Microsoft Azure OpenAI Service. The companies will develop solutions that will create closer consumer connections and increase speed to market with local relevancy.
Despite strong fundamentals, EL stock has dropped almost 15% YTD. The stock is currently trading at 30.12 times forward earnings and 2.9 times sales. Wall Street’s 12-month median price forecast of $142.1 for EL suggests a 15% upside potential from current levels.
Honeywell International (HON)
Another strong candidate for stocks to buy on the dip is Honeywell International (NASDAQ:HON), the industrial conglomerate with diversified technology and manufacturing operations. As a blue chip stock, Honeywell offers investors stability and growth potential through its robust portfolio, which spans aerospace, building technologies, performance materials, and safety solutions.
Honeywell reported solid earnings for the first quarter of 2024. The company generated revenues of $9.1 billion, up 3% YoY. Strong growth in the aerospace and building technologies segments contributed to the increase in revenues. Net income from continuing operations reached $1.46 billion, translating to an EPS of $2.23 compared with $2.07 for the year-ago quarter.
Honeywell remains committed to innovation and strategic partnerships to maintain its competitive edge. In mid May, Honeywell joined forces with Enel (OTCMKTS:ENLAY) North America to create a solution that automates building controls in commercial and industrial facilities. This will allow businesses to adjust their energy usage to help stabilize the power grid.
Despite these strong metrics and developments, HON stock is down 3.5% YTD. However, we should remind potential Honeywell investors that the dividend yield is 2.1%. The shares are trading at 20.45 times future earnings and 3.64 times sales. Finally, Wall Street’s 12-month median price forecast for HON stands at $220.00, an upside potential of around 9%.
On the date of publication, Tezcan Gecgil 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.
Tezcan Gecgil, PhD, began contributing to InvestorPlace in 2018. She brings over 20 years of experience in the U.S. and U.K. and has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Publicly, she has contributed to investing.com and the U.K. website of The Motley Fool.