It’s time to buy on the dip. The only problem? There aren’t many to choose from.

Of the 503 S&P 500 stocks, 229 are currently up more than 20% year-to-date, compared to just 26 that are down 20% in 2024. That makes this exercise a big challenge. 

The top three sectors for losers in 2024 are healthcare (7 are down 20%), consumer cyclical (5), and consumer defensive (4). 

I’ll choose one from each sector that I expect to rebound in the final four months of 2024 and into 2025. 

Here goes.

24/7 Wall Street Insights

• Dexcom (DXCM) fell short in the second quarter, but it plans to make amends with shareholders.
• Etsy’s (ETSY) business is remarkably resilient.
• Brown-Forman (BF.B) stock is cheaper than it’s been in a decade.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Healthcare, Dexcom (DXCM)

Dexcom (NASDAQ:DXCM) is down nearly 41% in 2024 and 27% over the past year. 

Earlier this year,  the company launched Dexcom ONE+ in Spain, Belgium, Poland, and the Netherlands. It is now available in 18 international markets outside the United States.

While that’s good news, its sales growth to new customers softened slightly in the second quarter. That said, revenues increased by 15% in Q2 2024 to $1.0 billion, with non-GAAP operating income of $195.4 million, 23% higher than a year ago. 

For 2024, it expects revenue of $4.025 billion at the midpoint of its guidance, a 12% in organic sales, and a non-GAAP operating margin of 20%, or $805 million. 

“We believe we have an incredible product and incredible future pipeline and an unparalleled market opportunity. We also have a great team capable of leading this market, but I expect more for myself and more from my team going forward,” stated CEO Kevin Ronald Sayer in its Q2 2024 conference call. 

Part of the reason for slower new customer starts in the second quarter had to do with its realignment and expansion of its sales force. It took one step back in the second quarter to take two steps forward into 2025. 

“We continue to invest in infrastructure to expand our geographical presence, provide compelling evidence to expand market access in new segments of key markets and leverage our product portfolio to meet the unique needs of various customers and health systems,” stated CFO Jereme M. Sylvain in the Q2 2024 conference call.

Most of the analysts’ questions in its Q2 2024 conference call revolved around the company’s loss of market share in the DME (durable medical equipment) market during the second quarter. The company expects these issues to persist into the second half of the year and is working diligently to restore some of its relationships in this market. 

While GLP-1 drugs get all the attention, Dexcom continues to build its CGM (continuous glucose monitoring) business. It might not get back to $160 where it traded in 2021, but it should get to triple digits over the next 12-18 months.   

Consumer Cyclical, Etsy (ETSY)

Etsy (NASDAQ:ETSY) is down nearly 32% in 2024 and 23% over the past year.

When consumers struggle with higher costs, arts, crafts, and unique gifts become secondary, non-essential purchases. The company’s Q2 2024 results bear this out. 

Its consolidated GMS (gross merchandise sales) were down 2.1% year-over-year, to $2.9 billion, with the Etsy marketplace contributing $2.5 billion of its total, also down 2.9% YOY on a currency-neutral basis. In addition, its GMS per active buyer — it had 91.0 million at the end of June — fell 3.2% to $124. 

The good news is that its take rate in the second quarter—the amount it makes from its GMS—was 22.0%, 110 basis points higher than in Q2 2023. 

So, despite the headwinds its customers face, it is still attracting new buyers while retaining active ones, which leads to more consistent revenue growth.

As for profitability, its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 7.9% in the second quarter, to $179.4 million, a margin of 27.7%, 130 basis points higher. 

In 2024, it expects its adjusted EBITDA margin to be similar to 2023 when it was 27.4%. While that likely means a slight drop in adjusted EBITDA, it provides investors with some confidence that its business model can survive challenging business environments. 

With an enterprise value of $7.72 billion, Etsy is currently valued at 16.6 times EBITDA, the lowest multiple in the past decade. 

It’s a value buy. 

Consumer Defensive, Brown-Forman (BF.B)

Brown-Forman (NYSE:BF-B) is down over 21% in 2024 and nearly 35% over the past year. 

Brown-Forman is a Louisville-based family-controlled company whose history dates back to 1870 when George Garvin Brown and his half-brother created a medicinal whiskey. Eventually, Brown partnered with George Forman, his accountant, and the name Brown-Forman was born. Forman died in 1901, and Brown acquired his shares and control of the company. It’s been in the hands of the Brown family ever since. 

Like most alcohol beverage manufacturers, the company suffers from a pandemic hangover. Wholesalers ordered products well into 2022 like there was no tomorrow, which has held back its traditional annual revenue growth rate of 4-5%.

“We anticipate a return to growth for organic net sales and organic operating income in fiscal 2025 driven by gains in international markets and the benefit of normalizing inventory trends,” stated its Q4 2024 press release. 

Brown-Forman expects 3% organic net sales growth and 3% organic operating income growth in fiscal 2025 (April year-end). In 2024, while its net sales were $4.18 billion, 1% lower than a year ago, its operating income was 25% higher at $1.41 billion, an attractive 33.7% operating margin. 

By every financial metric I can think of, Brown-Forman stock is cheaper than it has been in the past decade.  

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