4 S&P 500 Stocks Down 20% or More That You'll Regret Not Buying

Many investors frantically read the news last week: The S&P 500 officially entered correction territory, which is a drop of at least 10%. As of this writing, however, the correction is proving to be short-lived. The S&P 500 appears to be bouncing back and at this writing is only down less than 8% from its previous all-time high.

The market correction may be short-lived, but it turns out that there are plenty of high-quality S&P 500 stocks that are down 20% or more. Included among the underperformers are Alphabet (GOOG 0.76%) (GOOGL 0.79%), Vistra (VST -0.90%), Dollar General (DG 2.52%), and Airbnb (ABNB 2.15%).

Here’s why you might regret not buying these four while they’re down.

1. Alphabet

Alphabet is part of the “Magnificent Seven” — seven of the world’s most valuable companies. And among these seven, Alphabet stock is objectively the cheapest. As of this writing, it trades at less than 19 times its forward earnings estimates. Not only is this the cheapest of the seven, it’s also cheaper than the average for the S&P 500, which trades at more than 26 times forward earnings estimates, according to YCharts.

S&P 500 P/E Ratio Forward Estimate data by YCharts

It trades at a below-average valuation, but is Alphabet a below-average company? I certainly don’t think so.

With Alphabet, investors have access to multiple large, high-growth businesses. This includes its enormous advertising business, which grew 11% year over year to $72 billion in 2024. And it also includes its cloud-computing business, which grew by 30% to $12 billion. Those are quality financial results as far as I’m concerned.

Does Alphabet have below-average long-term prospects? Again, I don’t think so.

Alphabet has positioned itself well for growth in artificial intelligence (AI), quantum computing, robotics, self-driving cars, and more. No matter which secular growth trends change the world over the next decade, it seems that Alphabet will have a part to play. And it will likely even be a prominent part.

Investors who fail to buy above-average companies at below-average prices, such as Alphabet stock, usually regret it in the end. For this reason, Alphabet stock is at least worth some consideration right now, down 20% from its high.

2. Vistra

I’m the first to admit that the AI trend doesn’t excite me like it does for most investors. However, the soaring demand for electricity, in part due to AI, is a trend that does excite me. And that’s why I think that investors should give Vistra stock a look now that it’s down 32% from its high earlier this year.

Consider that in 2022, the 10-year compound annual growth rate for U.S. electricity consumption was just 0.5%, according to the U.S. Energy Information Administration. In other words, demand for electricity grew less than 1% annually over that decade. But according to a report from Grid Strategies, U.S. electricity demand is expected to grow 3% annually through 2029 — more than three times the annual growth rate in recent years — driven by trends such as AI and electric vehicles.

With the grid already pushed to the max, electricity generation companies such as Vistra are well-positioned through the end of the decade. Many analysts believe that nuclear energy will be increasingly indispensable, which is good for Vistra’s shareholders considering it’s the second-largest competitive nuclear power company in the country.

This year, Vistra expects $5.5 billion to $6.1 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Considering it has an enterprise value of $62 billion, it trades at just 10 to 11 times this year’s EBTIDA. That’s inexpensive for a company with a strong tailwind at its back.

3. Dollar General

Dollar General is the most boring stock on this list — it’s not benefiting from any powerful growth trends. It’s also the one that’s down the most. As of this writing, it’s dropped 68% from its highs back in late 2022.

I believe that Dollar General stock still has value as an investment. The first thing to note is that the business is still healthy. For evidence, people are shopping there as much as ever. In 2024, net sales grew by 5% to a record high of $40.6 billion. And traffic was only down 1% from 2023, which clearly demonstrates that consumers aren’t leaving the discount retail chain.

By contrast, Dollar General’s profits have taken a hit in recent years, which is why the stock is down. But now it trades at just 16 times earnings. In other words, it’s cheap in relation to its earnings that are down. But management is getting a handle on its situation and it appears that earnings are poised to grow in 2025 and beyond.

This puts Dollar General stock in a good position for a strong stock performance in coming years relative to its current price. Moreover, with questions about the state of the economy, investors should remember that consumers often turn to Dollar General in hard times, looking to save money, which could allow this business to have a relatively strong performance.

4. Airbnb

I’ve saved my favorite for last. Airbnb stock is already down 21% from highs in 2025 and it hasn’t hit an all-time high since early 2021. To me, that’s shocking. And considering how the business has grown and the opportunities it has, I don’t think this dismal performance can continue much longer.

Airbnb is the favorite punching bag for many investors who frequently claim that the company is losing market share to hotels due to hefty fees. But their claim is always unsubstantiated. Moreover, the data says otherwise. More nights and experiences were booked on the platform than ever in 2024 and the average daily rate increased year over year. In other words, more people were booking an Airbnb in spite of higher prices on average.

This dynamic is fueling record free cash flow for Airbnb, a key profitability metric. And the stock is trading at close to its lowest valuation from a free-cash-flow perspective.

ABNB Price to Free Cash Flow data by YCharts

Popular, massive, and still growing, Airbnb stock is a good buy today considering it’s down 21% from 2025 highs. But investors today also get a free wildcard when it comes to its potential upside. Management is taking a play from Amazon‘s book and launching new business ideas starting in 2025.

I believe that Airbnb is a good investment today for the core business alone. Unforeseen success in other areas — like Amazon’s success in cloud computing — could yield even better returns for shareholders.

Regardless of whether you share my enthusiasm for Airbnb or you prefer stocks such as Alphabet, Vistra, or Dollar General, one thing is true: Every good stock drops 20% or more at some point. Waiting on the sidelines for such a drop before taking action can be costly. But taking advantage of a drop once it inevitably comes is a great way to improve long-term returns.