Some growth stocks are currently at record highs, mainly thanks to the hype around artificial intelligence (AI). But not all stocks benefit from this trend. There are also growth companies with strong fundamentals that are overlooked and close to their 52-week lows. This offers opportunities for patient investors.
David Jagielski van The Motley Fool points out three interesting choices. These stocks offer potential long-term growth opportunities and are now attractively priced.
AstraZeneca
AstraZeneca stock closed last week just a few dollars above its 52-week low of $60.47. This despite solid quarterly results: revenue growth of 19% to $39.2 billion in the first nine months of this year and earnings per share up 21%. One point of attention is an ongoing investigation into possible fraud by senior executives in China, a crucial market for AstraZeneca.
Although this has depressed the share price, the underlying performance remains strong. With a price-to-earnings ratio of less than 14, based on next year’s expected earnings, the stock appears undervalued. For long-term investors, AstraZeneca offers a solid growth story.
UPS
UPS stock is down 14% since the beginning of the year despite a recent rally. However, the price remains within 10% of this year’s low. In 2023, UPS suffered a sales decline of more than 9%, but the latest quarterly figures show a recovery with sales growth of almost 6% year on year.
In view of the busy holiday season, this trend may continue, which would provide a positive boost to the fourth quarter figures. Furthermore, the long-term outlook for UPS remains strong, thanks to increasing demand for logistics services in the e-commerce sector. With a forward P/E of 15, UPS is attractively valued and an interesting choice for investors who want to capitalize on growth in logistics and e-commerce.
Dollar Tree
Dollar Tree has lost more than half its value this year and is near its lowest point in years. The current valuation, with a forward P/E of just over 10, suggests the stock is under severe pressure. Limited same-store sales growth (1.3% in the last quarter) and macroeconomic challenges pose a difficult situation. In addition, there is a threat of pressure from possible new tariffs on Chinese imports, which could affect margins.
Yet there is also light on the horizon. Dollar Tree is expanding its lineup of higher-priced products, which could soften the impact of rising costs. In addition, the chain is opening new stores, which could generate additional growth. For contrarian investors with a long-term view, Dollar Tree offers an opportunity to get in at a rock-bottom price.
Right, settle down everyone. We’ve got a bushel of stocks to dissect here, and frankly, some of them smell like they’ve been left in the sun too long. This article’s all about finding gems amongst the rubble, a bit like digging through your Grandma’s attic and finding a signed Beatles album… except instead of a musical treasure, you’re hoping to find financial stability. You never know what you’re going to uncover, but let’s be honest, it’s probably going to be covered in dust.
So, David Jagielski from The Motley Fool, bless his optimistic soul, thinks he’s found some hidden treasures. "Some growth stocks are at record highs" he chirps, conveniently ignoring the fact that those stocks are probably fuelled by hype and pixie dust. But fear not, because he’s sniffed out a few underdog companies skulking near their 52-week lows, ripe for the plucking.
Let’s dissect these prospects, shall we?
AstraZeneca: Oh, AstraZeneca, everyone’s favorite pharmaceutical giant. They’re practically swimming in cash, with revenue up 19%. You’d think their stock would be soaring like a SpaceX rocket, wouldn’t you? Except there’s this pesky little "investigation into possible fraud" in China. Bit of a downer, isn’t it? Like finding out your favourite celebrity is secretly a tax-dodging squirrel aficionado.
Still, even with the scandal, their shares seem undervalued. Could be a good time to hop on board, but let’s be honest, investing in pharmaceuticals is always a bit of a gamble. It’s like Russian roulette, but instead of bullets, it’s thalidomide.
Next up, UPS: Ah, good old UPS, the guys who deliver your Amazon parcels and occasionally lose your luggage. They’ve had a bit of a bumpy ride this year, down 14% since January. But hold on to your wallets, folks, because the holiday season is just around the corner! Sales are finally picking up, so they might just claw their way back to profitability. Think of it like a phoenix rising from the ashes of failed deliveries and lost packages.
Long-term, they’re banking on the e-commerce boom. Everyone’s buying stuff online these days, even my Nan orders her cat food on the internet.
So, UPS could be a safe bet, but let’s be realistic, they’re about as exciting as watching paint dry.
Finally, we come to Dollar Tree: Now, this one’s a bit of a wild card. It seems like every other day there’s a new tariff on something coming from China. Their stock’s been hit hard – down over 50%. It’s like watching a car crash in slow motion, fascinating and terrifying in equal measure.
But wait! They’ve got a plan! They’re selling more expensive things and opening new stores. Bold, I’ll give them that. It’s a bit like wearing a life jacket while swimming in shark-infested waters – it might help, but it’s still incredibly risky.
So there you have it folks – three companies with their own unique set of challenges and potential rewards. As always, I’m not a financial advisor, so don’t take my word for it. Do your own research, consult with a professional, and remember, investing is like dating – there are plenty of fish in the sea, and some of them are going to break your heart.
Some growth stocks are hitting record highs fueled by the excitement surrounding artificial intelligence (AI). However, not every company is benefiting from this trend. There are growth companies with strong underlying financials that are being overlooked and are trading near their 52-week lows. This situation presents attractive opportunities for investors with patience.
David Jagielski from The Motley Fool has identified three companies that fit this description. These stocks offer the potential for long-term growth and are currently priced at attractive levels.
AstraZeneca
AstraZeneca’s stock closed last week just a few dollars above its 52-week low of $60.47, despite reporting solid quarterly results. The company achieved a 19% revenue increase, reaching $39.2 billion in the first nine months of the year, and earnings per share jumped by 21%. It’s important to note that an ongoing investigation into alleged fraud by senior executives in China, a significant market for AstraZeneca, has weighed on the company’s share price.
Despite this setback, AstraZeneca’s underlying performance remains strong. With a price-to-earnings ratio of less than 14, based on projected earnings for next year, the stock appears undervalued. For investors with a long-term outlook, AstraZeneca presents a compelling growth story.
UPS
UPS stock has declined by 14% since the start of the year, despite a recent rally. However, the price remains within 10% of its lowest point this year. While UPS experienced more than a 9% sales decrease in 2023, the latest quarterly figures indicate a positive turnaround, with sales growing nearly 6% year-over-year. Given the busy holiday shopping season, this upward trend is likely to continue, potentially driving strong fourth-quarter results.
Looking ahead, UPS’s long-term prospects remain favorable, supported by the increasing demand for logistics services in the booming e-commerce sector. With a forward price-to-earnings ratio of 15, UPS is attractively valued and represents an interesting choice for investors looking to capitalize on the growth of logistics and e-commerce.
Dollar Tree
Dollar Tree has lost more than half its value this year and is currently trading near its lowest point in several years. The current valuation, with a forward price-to-earnings ratio of just over 10, suggests the stock is under significant pressure. Limited same-store sales growth of only 1.3% in the last quarter and challenging macroeconomic conditions are contributing to this difficult situation.
Furthermore, the possibility of new tariffs on Chinese imports poses a threat to Dollar Tree’s profit margins. However, there are also reasons for optimism. Dollar Tree is expanding its product lineup to include higher-priced items, which could help mitigate the impact of rising costs. Additionally, the company is opening new stores, creating opportunities for additional growth. For contrarian investors with a long-term perspective, Dollar Tree offers a chance to buy into the company at a significantly discounted price.
What are the potential risks of investing in undervalued stocks?
**Host:** Welcome back to the show! Today we’re diving into the murky waters of undervalued stocks. Joining me is David Jagielski, a Motley Fool contributor who’s sniffed out three companies that might be worth a closer look. David, thanks for being here.
**David:** It’s great to be here!
**Host:** So, as always, the stock market is a mixed bag. Some companies are soaring on the wings of AI hype, while others seem to be stuck in the doldrums. You’re focusing on the latter. Why should we care about undervalued stocks, especially those near their 52-week lows?
**David:** Great question! It’s all about finding hidden gems, stocks with strong fundamentals that are temporarily overlooked by the market. These companies might be facing headwinds, but their underlying business is solid, and that often creates an opportunity for patient investors to buy in at a discount.
**Host:** Let’s talk specifics. You’ve highlighted AstraZeneca, UPS, and Dollar Tree. AstraZeneca’s a pharmaceutical giant, strong financials, but a bit of a scandal in China is dragging down its stock.
**David:** Exactly! They’re facing an investigation into potential fraud. That’s obviously concerning, but the company is still performing well — revenues and earnings are up significantly. So the vrais question is, is the market overreacting to the investigation? Could be a buying opportunity, but it’s definitely something to monitor closely.
**Host:** And UPS? They deliver our packages, which should be good business, but their stock is down 14% this year.
**David:** They’ve struggled lately, partly due to a slowdown in e-commerce growth. But with the holiday season approaching, I expect their sales to pick up. Long-term, they’re well-positioned to benefit from the ongoing growth in online shopping.
**Host:** And then there’s Dollar Tree. That one feels risky. Their stock has taken a hit and tariffs are a concern.
**David:** It’s definitely a gamble. But they’re trying to adapt by raising prices on some items and opening new stores. If they can navigate these challenges, there could be significant upside.
**Host:** So, the theme here is patience, right? These aren’t get-rich-quick schemes.
**David:** Absolutely! You need to be willing to wait and see how these companies navigate their challenges. But if you’re looking for long-term growth potential at attractive prices, these stocks are worth considering.
**Host:** Thank you, David! Sound advice as always. For our listeners, remember to do your own research and consult a financial advisor before making any investment decisions.
