Looking to buy the dip? Here’s how you could screen for opportunities

Key points:

• Looking to buy the dip? In a market meltdown, the real skill isn’t buying the dip—it’s knowing which dips are worth buying.
• Screeners to hunt for opportunities: We’ve built two targeted screeners to help you hunt for opportunity: one to spot solid companies unfairly dumped, another to catch elite growth names finally on sale.
• Key risks to watch: falling earnings, value traps in disguise, policy shocks from global power plays, and fast-moving sector rotations.

Buying the dip is one of the oldest instincts in investing—but when markets are being hit by policy shocks, forced selling, and macro uncertainty, it can be hard to tell a bargain from a trap.

The recent market turmoil, triggered by sweeping tariffs and amplified by fragile sentiment, has created sharp dislocations in prices across sectors and regions. For investors trying to make sense of the opportunity set, screeners can help surface ideas that may warrant closer inspection.

Here are two types of screens that could help highlight names worth adding to your watchlist—each targeting a different kind of potential opportunity.

Screener 1: The “Panic Discount” play

This screen looks for companies that appear to have been sold off not because of weak fundamentals, but because of broad-based market stress. In past dislocations, companies with strong balance sheets and consistent profitability often rebounded first—particularly those in defensive sectors or with a global footprint.

The goal here is to isolate companies that are:

• Fundamentally strong - think profitability, stable cash flows
• Not overly leveraged
• Trading at a sharp discount due to broad-based panic

This isn’t about hype-driven growth stories. In fact, many of the names here may look “boring”—but in uncertain markets, boring can be beautiful. These are the kinds of companies that rebound first once stability returns. Dividend payers, defensive sectors, and globally diversified industrials often show up here.

For this screener, consider using the below metrics:

• Net margin >10% (reasonable pricing power)
• Return on invested capital >15% (strong underlying business)
• Free cash flow yield >5% (strong internal cash engine)
• Net debt /EBITDA <2.5x (avoids financial stress)
• YTD price performance <-15% (signals capitulation risk)
• (Optional) Dividend yield >2% (filters for cash returns)

Note: For international markets, these thresholds may need to be adjusted downward to reflect different sector norms and accounting standards.

Reference results you might find in this screen right now:

• US: Caterpillar, Merck, Accenture
• Germany: SAP, Hugo Boss, Infineon Technologies
• China/HK: Samsonite, Lenovo

Screener 2: The “Quality Compounders on Sale” list

The second screen is aimed at long-term compounders that were previously too expensive—but are now approaching valuations that may better reflect near-term uncertainty.

These are the companies with:

• Strong fundamentals
• Clear competitive advantages
• Long-term growth potential
• But now, more palatable price tags

Some of these names may still be in positive territory for the year, but they’ve pulled back from their highs. For investors with multi-year horizons, this type of setup can offer interesting entry points.

Metrics to consider for the screener in this case would be as below. Note that the numbers may have to be adjusted for international markets vs. the US market.

• Revenue growth 5-Yr CAGR >15% (sustained growth trajectory)
• Return on invested capital >12% (capital efficiency and moat strength)
• Forward P/E < industry average (decent relative valuation)
• Price change from 52-week high <-20% (correction from peak without collapse)

Note: Again, depending on the market, some valuation or profitability metrics may screen lower than US equivalents—even for high-quality businesses.

Reference results showing up in this screen now:

• US: Alphabet, Nvidia, Meta, Eli Lilly, Palo Alto Networks
• Germany: Rheinmetall, Siemens, Deutsche Telekom
• China/HK: Tencent, BYD, Xiaomi

These are companies that were once priced for perfection. Now, with sentiment fragile and multiples contracting, they’re getting closer to what a long-term investor might call “reasonable.”

Risks to consider

As always, no screener guarantees success. Some names that look promising on metrics may face real business pressures. A few key risks to keep in mind:

• Earnings revisions matter: A stock can look cheap because the outlook just collapsed. Cross-check analyst updates and recent guidance.
• Geopolitical exposure: Consider risks around tariff threats, supply chains, energy costs, or regulatory shifts.
• Currency effects: Global names can look cheap in local currency but behave differently in base currency terms.
• Value traps vs. value opportunities: Strong past cash flows don’t guarantee resilience ahead. Stress-test business models under slower growth or disrupted trade.

Summary: Build watchlists, stay selective

These screens aren’t signals to act immediately—they’re tools to help identify ideas worth watching more closely.

Some companies are being sold off for macro reasons that may pass. Others are high-quality names that have come back to earth. Both could present opportunities—but selectivity, context, and a clear understanding of the risks are as important as ever.

Often, the best investment decisions are the ones you make before the crisis ends.