Buy this S&P 500 Stock On the Dip for 100% Upside

The Nasdaq looks a bit overheated from a technical standpoint after soaring almost 50% off its April lows, including a ~6% jump since the start of September. The tech-heavy index is trading well above its 50-week moving average and at some of its most overbought RSI levels over the past decade.

Given this backdrop, some investors might want to utilize the post-Fed cut surge to new all-time highs as an amazing opportunity to buy best-in-class large-cap stocks that are trading way below their records.

To paraphrase the famous Warren Buffett quote, it’s time for long-term investors to be greedy while others are fearful and buy some hard hit stocks.

The beaten-down S&P 500 stock we explore today—Deckers Brands—is a well-run business with a stellar balance sheet and a solid growth outlook. DECK found support at its long-term 200-week moving average, and it has still crushed the benchmark over the last decade.

Charlie Munger, Buffett’s longtime right-hand man, once said:  “If all you ever did was buy high-quality stocks on the 200-week moving average, you would historically beat the S&P 500 by a large margin over time.”

The nearby chart shows that the Nasdaq held this level in April before it soared, as it has several times in the past decade.

Why Market-Beating Deckers Stock is a Must-Buy

Deckers Brands DECK is a footwear standout with a portfolio that features UGG, Teva, and most importantly, HOKA.

Deckers stock has skyrocketed roughly 1,100% in the past decade to blow away the S&P 500’s 260% and Nike’s NKE 25%. DECK’s run was fueled by the massive growth of its high-end running shoe brand HOKA, which it bought in 2012.  

Deckers transformed HOKA into an industry titan, eating away market share from Nike and Adidas. HOKA posted a compound annual growth rate of roughly 50% over the last four years. The company’s direction-to-consumer expansion also helped improve margins, sales, and earnings. 

The footwear company grew its total revenue by an average of 19% between its FY21 and FY25 and its GAAP earnings per share (EPS) by 32%. These are very difficult to compete against numbers. On top of that, tariffs, inflation, and slowing consumer spending recalibrated its outlook, sending Deckers stock tumbling.

DECK stock tanked after its Q3 FY25 earnings release at the end of January on the back of weaker guidance. The stock had also grown overheated. The first hint of slowing EPS and revenue growth after its furious run sparked a selloff that has Deckers trading 48% below its all-time highs.

The chart below shows that Deckers found support at its 200-week moving average in April. It has chopped around since then as Wall Street pulls back on the entire industry and consumer-centric areas amid tariff and inflation worries.

The stock could be due to break out at some point. Deckers offers investors nearly 100% (~96%) upside from its current levels if DECK ever returns to its peak.

For example, if a stock that was a $100 a share and falls 50% to $50, it must double (a 100% increase) to get back to $100. DECK fell from roughly $224 to $115 a share. 

Image Source: Zacks Investment Research

Deckers is projected to grow its revenue by 9% in FY26 and 7% next year. Its adjusted earnings are projected to come in flat YoY in FY26 and then jump 8% next year.

DECK’s earnings revisions have trended higher since its Q1 FY26 release in late July. It has also beaten our bottom-line estimates by an average of 40% in the past four quarters.

DECK’s drop, coupled with its earnings growth outlook, has Deckers trading at a 30% discount to its Retail-Wholesale sector and 22% below the S&P 500, even though the stock has outperformed both by around 4X over the past 10 years. The stock is trading in line with its 10-year median at 18.1X forward 12-month earnings.

The running shoe firm can weather the current economic uncertainty because it boasts a stellar balance sheet, with $1.7 billion in cash and equivalents and $3.8 billion in total assets, against $1.4 billion in total liabilities and zero debt.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research