The S&P 500 has dropped 10% or more nine times since 2010, not including the current sell-off. However, the index has delivered an average return of 18% in the year following the start date of these corrections. In fact, the market was higher in eight of the last nine instances.
Keeping these above-average returns in mind — and with many stocks now trading at newly lowered valuations — it looks like an ideal time to add to stocks. Here are three magnificent stocks trading at once-in-a-decade valuations that I’d happily buy right now.
1. Zoetis
Zoetis (ZTS 1.28%) is a leading animal healthcare company offering over 300 medicines, vaccines, and other precision health products to care for companion animals and livestock globally.
Since its spin-off from Pfizer in 2013, Zoetis has delivered an annualized total return of 15%, demonstrating the market-beating potential of what might look like a steady-Eddie investment at first glance. However, after experiencing a pandemic-driven boom that saw pet adoptions and subsequent vet clinic visits skyrocket, the company’s stock has declined by 39% as things normalized.
Following this decline, though, Zoetis now trades at a price-to-earnings (P/E) ratio of 27 — its lowest mark in a decade.
ZTS PE Ratio data by YCharts. PE Ratio = price-to-earnings ratio.
While the market may now be more pessimistic toward Zoetis’s stock than it has ever been, the company’s actual operations and outlook look stronger than ever. Zoetis grew revenue and adjusted earnings per share by 11% and 17%, respectively, in 2024 and saw explosive growth in its newest growth area: helping osteoarthritis (OA) pain in dogs and cats. Librela (for dogs) and Solensia (for cats) grew sales by 80% and 20%, respectively, in 2024, as veterinarians continue to choose these products for OA pain over traditional nonsteroidal anti-inflammatory drugs that may have more side effects.
With 40% of dogs experiencing OA pain at some point in their life and cats and dogs already living two years longer than they were as recently as 2012, these medicines could play a key role in keeping our aging buddies comfortable.
One final bit of good news for investors: Zoetis’s 1.2% dividend yield is at its highest-ever mark, and management has grown dividend payments by 18% over the last decade.
Steady growth, promising growth areas, and a ballooning dividend at a decade-low valuation? I’ll happily keep adding to one of my most significant holdings.
2. Yeti
Yeti (YETI 3.42%) is an increasingly popular lifestyle brand famous for its premium outdoor products and drinkware. Creating durable, high-quality goods, Yeti has developed an immensely loyal customer base of outdoor enthusiasts, whether they’re surfers, fishermen, climbers, bull riders, or barbeque pit masters.
After the company’s stock quintupled in the three years following its 2019 initial public offering, it looked like Yeti would be the next big lifestyle brand. However, Yeti’s stock has plummeted 75% from its all-time highs following a major recall of some of its coolers in 2023 and the current tariff concerns with China.
However, while Yeti’s stock has essentially retraced to its starting point in 2019, the company has more than doubled its sales, net income, and free cash flow (FCF) over that time.
While the road to get here was bumpy, Yeti’s growth prospects still look promising as it tries to grow in two key ways: by marketing to adjacent verticals and expanding internationally. Expanding into new product categories, such as cookware after acquiring Butter Pat, collaborating with creators adjacent to its core outdoor niche, and sponsoring teams in Major League Soccer and Formula 1, Yeti’s audience reach grows by the day.
Meanwhile, the company currently generates only 18% of its sales from outside the United States, whereas many of its athletic brand peers are closer to 40% or 50%. Though this 18% figure is significantly higher than the 2% in 2018, Yeti’s 30% international sales growth in 2024 shows that the best may still be to come.
Currently trading at its lowest ever P/E ratio of 13, Yeti could prove to be a steal as it shifts its drinkware production out of China.
YETI PE Ratio data by YCharts. PE Ratio = price-to-earnings ratio.
Set to make 80% of its drinkware products outside the country by year’s end, investors shouldn’t view Yeti as damaged goods due to the tariffs. Instead, it is one of the most beloved brands out there, with a cult-like following and a massive $300 million net cash balance available to battle with.
3. Wingstop
Rapidly growing buffalo wing franchisor Wingstop (WING 0.35%) operates 2,154 locations in the U.S. and 359 internationally. While Wingstop delivered its 21st consecutive year of same-store sales (SSS) growth and increased its store count, sales, and net income by 16%, 36%, and 55%, respectively, in 2024, its stock price sits 49% below its 52-week highs.
While this drop makes absolutely no sense at first glance, it is much more reasonable when we see that Wingstop traded above 150 times earnings at one point last year. Simply put, it was priced for perfection and barely missed the mark with its most recent results. Now trading at 59 times earnings — far below its average of 100 — Wingstop looks like a once-in-a-decade opportunity, in my opinion.
WING PE Ratio data by YCharts. PE Ratio = price-to-earnings ratio.
The main reason I believe Wingstop will grow into this lofty valuation is that management expects to quadruple its store count over the long term and has the track record to back this notion. While this growth may sound like an overly ambitious goal, the company has a pipeline of over 2,000 restaurant commitments under development. This figure is the highest it has been in the company’s history and nearly equals its existing store count.
This massive pipeline, paired with Wingstop’s long history of SSS growth, should help the company quickly outgrow this valuation.
And if Wingstop’s premium price tag has you wary of an investment, consider that it has averaged a P/E ratio of 100 across its publicly traded history, yet it has become a 10-bagger over that time.
