The buy the dip stock list is composed of stocks with strong earnings performance over the last five years. These are companies that are growing and are expected to continue growing. See the stock lists below, as well as the scans that are used to generate them.
You can use these stock lists how you wish. You may choose to buy these stocks on declines, use the lists as a watchlist for swing trades, or focus on swing trading or investing in the strongest stocks on the list (or ones you like the most based on your personal strategy).
The lists are updated monthly, meaning stocks come onto the list as they meet the required criteria, and they fall off the list when they don’t.
This list was updated after the close on June 4, 2022.
The Current “Buy the Dip” Stock List
The lists are subject to change, although they don’t change much or very often, which is why this page is updated once per month.
Click on the screenshots below to see the stocks. Provided by StockRover.com
Strict Scan List – 9 Stocks
The list shows a number of metrics for the stocks. The first column shows how close the price is to its 52-week high (100%). The lower the number the means the stock has pulled back. For example, if it says 62%, that means the price is 38% off its 52-week high price. If it is at 88%, that means the price is currently only about 12% below its 52-week high.
Last month there were 7 stocks, and this month there are 9.
List of June 4:
MPWR, UI, MSFT, CMG, ASML, DECK, MED, INTU, EPAM
Gained: UI, CMG
List as of May 18
The scan criteria for this list are discussed below.
Many of the stocks on the list above were strong performers but got hit hard on the recent stock market decline. More than half have fallen at least 25%.
Here’s the performance versus the S&P 500 over the last two years.
Robust Scan List – 19 Stocks
This list is slightly less strict and therefore tends to contain about twice as many stocks as the Strict list. The scanner criteria for this list are also discussed below.
List as of June 4
Here’s the chart showing the performance of these stocks (combined) over the last two years relative to the S&P 500 ETF (SPY).
How the “Buy the Dip” Stocks Have Performed
Here is how the portfolios have performed over the last year versus the S&P 500.
- Strict Scan: -5.5%
- Robust Scan: +7.4%
- S&P 500 (SPY): -1.7%
Over the last 2 years:
- Strict Scan: +71.7%
- Robust Scan: +73.5%
- S&P 500 (SPY): +34.4%
Note: these results just give us an idea of performance, not exact performance. The backtest looks at the performance of stocks in the portfolio right now going back one and two years. It does not determine when those stocks were added to the portfolio (met the parameters) or take into account stocks that fell out of the portfolio.
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Buy the Dip Stock List Scan Criteria
Here you will find the criteria for the “buy the dip” stock lists. These criteria/scans seek out stocks that are seeing strong and consistent earnings growth, coupled with strong price performance relative to the S&P 500.
I use StockRover for the scans.
I have started tracking two scan lists.
- Strict Scan List – super-strong growth stocks with strong price performance and strong growth expected in the future.
- Robust Scan List – same as above, except parameters are reduced slightly. This list usually has about 2x as many stocks as the Strict list.
The scan criteria are listed below.
Here are the Strict Scan criteria. Ignore things that are crossed off, except you can toggle the Price vs. 52-Week High (%) < 80. Include that criteria to see which stocks have fallen at 20% off their highs and thus may present a buy-the-dip opportunity. Leave it unchecked to see the full list of stocks meeting the technical and fundamental criteria (usually between 10 and 20 stocks).
The other crossed-off criteria are used for our Robust Scan.
This is a slight variation of the strict scan. It still looks for strong stocks, but a few of the criteria are tweaked to provide a slightly larger list of stocks.
Here’s what everything on the Strict Scan means:
EPS = Earnings per share for the calendar year, so EPS 5-Year Avg (%) > 15 means only include companies that have grown their EPS over the last 5 years by an average greater than 15% per year. This shows strong and steady growth.
TTM = Trailing Twelve Months, so TTM1 is the last 12 months, TTM2 is the 12 month period prior, and so on, going back in time. > 0 criteria mean companies with negative earnings in the last 4 years aren’t included on the list.
Price vs 52-wk High (%) <75 means the price must have dropped by 25% or more from its high. Uncheck this to see stocks that meet all the other criteria but that haven’t dropped.
Sales 5-Year Avg (%) > 10 means only include companies that have increased sales by at least 10% per year, on average, over the last 5 years.
EPS Y4 means EPS four calendar years ago. Therefore, those formulas are saying that EPS must have gone up each year in order to be included on the list.
Annualized 5-Year Return vs S&P 500 > 10 means the stock has outperformed the S&P 500 by an average of at least 10% per year over the last 5 years.
This list includes both US and Canadian stocks (Exchange).
5-Year EPS Growth Estimate and Next Year Growth Estimate on analyst expectations. While analysts can wrong, if people are expecting continued growth in the stock, that tends to help its future prospects. If expectations drop below the required level, then the stock falls off the list.
Here’s what the additional parameters on the Robust Scan mean:
For this list, the Next Year Growth Estimate is dropped.
Max Drawdown 5-Year > -51 means don’t include stocks that have had a bigger drop than 51% (high to low) in the last 5 years. This helps eliminate those stocks that swing wildly. The list tends to be about 25% bigger if this is not included.
For this list, the Annalized 5-Year Return vs. S&P 500 is dropped. Instead, we use…
5-Year Return vs. S&P 500 > 20. This is a less strict parameter. It also looks at total return instead of annualized return. Annualized returns can also be a little funny sometimes, while total return paints a simple picture. If the S&P 500 is up 100% over the last 5 years, only include stocks that are up at least 120%, for example.
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Variations of the Buy the Dip Stock Scan
There are a number of ways these lists can be used. Here are some ideas. Test, research, and verify for yourself before using.
- The Strict Scan doesn’t include many stocks. It could basically be used as a buy list for longer-term investment. Rotate into and out of stocks as they come into or drop off the list (or using some other method). You will still need to figure out when to get into stocks that are already on the list when you first begin.
- Look for stocks on the lists that have fallen 20%, 30%, etc, off their highs. Assuming they are still on the list meeting all the quality criteria, it may be a buying opportunity. Define how and when you will enter these.
- Look for stocks on the lists that are near their highs. These stocks are holding up the best and showing relative strength. These could potentially be used for swing trades.
These are pretty simple scans, but they really narrow it down to companies that produce growth and are expected to continue producing it.
Here are some additional ways to tweak the lists to your liking.
- Remove the “growth estimates” at the bottom of the scan to get more stocks, since a lot of stocks aren’t popular enough to have growth estimates published on them (and will thus be eliminated if those criteria are included). Many Canadian stocks are eliminated for this reason.
- Reduce the number of increasing earnings or positive earnings to include newer companies in the last that may have only recently turned profitable.
- You could also reduce the growth criteria to get more stocks that would still be quality. Reducing the >15s to >10s increases the number of stocks, but the overall performance of these stocks as a portfolio may drop off slightly.
There are nearly infinite variations of this type of scan. Take from it what you will and leave the rest.
Trading the Buy the Dip Stock List
Define how you will use the scanner in your trading plan. Define when and why you will buy and when and why you will sell. Also, consider your position size.
For myself, I look at its typical pullback amount in percent (range of values over the last few years). Once it has experienced a pullback of that magnitude or greater, I look for a bottoming pattern. Ideally, I want the long-term uptrend still intact despite the decline. I view these are medium-term trades, typically lasting 1 to 3 years.
A stop loss is placed at a point where if the stock drops back to it I was wrong about the rally and I get out.
Cory Mitchell, CMT
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Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.