5 Beaten-Down Growth Stocks With Strong Risk-Reward
More on the AI trade: our AI storyline page collects our pieces on AI stocks.
Here’s how we measured risk and reward. For each stock, we found the past days since 2003 (one per week) when it sat about as far below its 1-year high as it does today. Then we looked 35 trading days ahead, the time left until Dec. 31. The good case is the gain that only 1 in 10 of those stretches beat. The bad case is the loss that only 1 in 10 were worse than. Risk-reward is the first divided by the second.
That bad case is the number that matters most for a large portfolio: a 15% drop on a $500,000 position is $75,000. Do you know your portfolio’s bad case? A Trefis partner firm can work it out with you in a free 15-minute call.
Which Five Stocks Pass The Screen?
| Stock | Good case | Bad case | Ratio |
|---|---|---|---|
| Applied Materials (AMAT): chip machines | +28% | −8% | 3.5 |
| Lam Research (LRCX): chip machines | +39% | −11% | 3.4 |
| Marvell (MRVL): custom AI chips | +30% | −9% | 3.4 |
| Vertiv (VRT): data-center power and cooling | +47% | −21% | 2.3 |
| Amphenol (APH): connectors | +17% | −8% | 2.2 |
Each also has a multiple that has fallen this year while analysts expect sales to keep growing.
See more lines: the method, the also-rans and the limits
Ranked 12 large stocks whose price-to-sales multiple (market value ÷ trailing 12-month revenue) is 30% or more below its 2026 peak while consensus revenue grows 15% or more this fiscal year and next; others pass too, including Dell, Western Digital, TSMC and Oracle. Good case = 90th percentile of 35-trading-day returns on past days at least as far below the 252-day high (minus 5 points), one day per week; bad case = 10th percentile; all at Tuesday’s close. Samples: AMAT 94, LRCX 72, MRVL 156, VRT 57, APH 696. Also ranked: Meta 2.1, ServiceNow 1.8, Carvana 1.7, Nvidia 1.7, KLA 1.6, Google 1.3. Broadcom has no ratio: even its bad case was a small gain (+2%, 42 past days). Limits: past ranges, a small sample for Vertiv, and three of the five are chip stocks.
What Would Break Each One?
- Applied, Lam and Marvell: a cut in 2027 chip spending by the big memory makers or TSMC.
- Vertiv and Amphenol: a pause in data-center building, the fear that hit Vertiv after the midterms.
Names already marked down can offer strong risk-reward. From levels like today’s, these five have historically offered more upside than downside. None is safe: a bad case of −8% to −21% in seven weeks is real money.
What Should You Ask Next?
- 3 stocks that could pop before December 31: the odds of +15%.
- Applied Materials stock at $371: why is it half price?
- The screen behind these five: Which big stocks expect faster growth but got cheaper this year?
If you have $1 million or more invested, get a second opinion before year-end in a free 15-minute call with a Trefis partner firm.
For questions about this article or underlying research, email help@trefis.com.