Tetra Tech (NASDAQ: TTEK), an American consulting and engineering services company, saw its stock fall more than 30% in less than 30 days, as of February end, amidst growing market anxieties about trade tensions. Should you buy this dip? Dip buying is a viable strategy for quality stocks when broad market conditions are favorable, provided that the stock has a history of recovering from dips. As it turns out, not only does Tetra Tech pass basic fundamental quality checks, but it has also returned, on average, 56% in one year, and 61% as peak return, following such dips historically.
Image by Gerd Altmann from Pixabay
Current Dip Opportunity
It has been less than one month since TTEK last experienced a dip of more than 30% within 30 days and since then, it has returned 2.8%. Details about historical medians are in the table below:
Past Data On Recovery From Dips
TTEK had two events since 1/1/2020 where the dip threshold of -30% within 30 days was triggered
- 61% median peak return within 1 year of dip event
- 167 days is the median time to peak return after a dip event
- -1.6% median max drawdown within one year of dip event
Tetra Tech Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
Dip buying, while attractive, needs to be evaluated carefully from multiple angles. Such multifactor analysis is precisely how we construct Trefis portfolio strategies. If you want an upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
| Returns | Mar 2025 MTD [1] |
2025 YTD [1] |
2017-25 Total [2] |
| TTEK Return | 3% | -25% | 268% |
| S&P 500 Return | -3% | -2% | 158% |
| Trefis Reinforced Value Portfolio | -4% | -5% | 643% |
[1] Returns as of 3/10/2025
[2] Cumulative total returns since the end of 2016
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
