The stock market is on track to post its worst year since 2008. The S&P 500 is in a correction (down at least 10% from the high). And the Nasdaq Composite is in a bear market (down more than 20% from the high).

The sell-off has pushed many excellent stocks into the bargain bin. Stocks like Tesla (TSLA 2.17%) and United Parcel Service (UPS -0.37%) are down big off their highs. Here's why this growth stock and blue chip dividend stock could both be worth buying now.

A blue Tesla Model 3 cruises down a paved road.

Image source: Getty Images.

Think long term

Howard Smith (Tesla): There are several reasons Tesla shares are down nearly 50% year to date. The company is the undisputed leader in a sector that is expected to continue to grow for years to come. And just as there are various reasons the stock has dropped so much, there are several good reasons to buy shares now.

Tesla is on pace to produce about 1.4 million electric vehicles (EVs) this year, and the company says it expects to grow that at a 50% annual rate for several more years. Its two newest factories are just beginning to ramp up, and more will be announced. Global passenger car sales are expected to be about 85 million in 2023. Not all global sales will transition to electric power, of course, but the opportunity is still massive for Tesla and its EV competitors.

Tesla has a first-mover advantage that it has molded into a cash machine. Even with its growth investments, Tesla has generated more than $6 billion in free cash flow over the first nine months of 2022. At the end of the third quarter, it had more than $21 billion in cash and marketable securities.

The company intends to begin shipping its Semi heavy truck next month and the Cybertruck next year. It hopes to maintain its advantage over competitors with some in-house battery production and possibly some lithium refining. It also has a growing energy business that contributed 5% of total revenue in the third quarter.

The slide in Tesla's stock price came amid a broadly declining market but also due to some company-specific reasons. CEO Elon Musk sold about $19 billion worth of his Tesla stock this year related to his acquisition of Twitter, which investors also see as a distraction. And the recent price-to-earnings (P/E) ratio was still above 50 on a trailing-12-month basis.

But share prices are as low as they have been since late 2020, and growth is expected to continue at its recent pace. For those investing for a retirement that's years away, now is a good time to buy Tesla stock.

A high-quality business you can count on

Daniel Foelber (UPS): Like Tesla, UPS is performing well. But its stock has taken a hit and is down 17% year to date and 23% from its all-time high. Broader market volatility and recession fears have given investors a chance to buy UPS at a good price. However, the stock could face more pressure in the short term.

It's no secret that UPS is a cyclical company. Automakers like Tesla do better when consumer spending is high and interest rates are low. UPS is similar in that it benefits from a bustling economy with high consumer spending and high order volumes for businesses and freight companies. A slowing economy usually coincides with lower package delivery volumes.

Despite these headwinds, UPS' results indicate that its services command a premium price. The company has done a masterful job of offsetting inflation-related costs with price hikes. Years of investment in expanded routes, tools for small and medium-sized businesses, and the company's healthcare segment have also paid off. UPS is on track to deliver record revenue and a high operating margin for full-year 2022.

Given its size and industry position, UPS can only pivot so much when the economic cycle shifts. Instead, its objective is to capitalize on longer-term trends. Even if growth slows, UPS has positioned itself to continue taking market share from the competition in the decades to come.

UPS has a dividend yield of 3.5%, which is another attractive incentive for long-term investors.

Zoom out and focus on the big picture

Tesla and UPS might be in completely different industries, but the two companies share many similarities regarding their investment theses.

Each company sports an industry-leading operating margin, which indicates a well-run business that can absorb a hit to profitability in a recession. Tesla is a far more expensive stock than UPS, but the company is also growing at a torrid rate. Meanwhile, UPS is a compelling value, with a price-to-earnings ratio of just 14.3 and a sizable dividend yield.

Tesla and UPS are both susceptible to a slew of industry challenges and a weakening global economy. But they are also excellent businesses that could very well extend their lead over the competition during a downturn in the business cycle thanks to their healthy balance sheets and market position.

Overall, Tesla might appeal to investors with higher risk tolerance. At the same time, UPS is a great addition for passive income-minded folks or those looking for inexpensive stock relative to the S&P 500.