The investor sentiments in the US markets appear to be on the bullish trend as a result of strong improvements in overall macroeconomic environment, pause in the interest rate increases, expectations of the cuts in rates in 2024, etc. The positive momentum in stock market was seen after the tough year for equity markets in 2022, making it one of the worst years for equities since the year 2008. Of 3 major US stock indexes, NASDAQ 100 saw a significant decline of over ~30% in 2022 because of the withdrawal of the funds from the growth firms as fears related to recession ramped up. S&P 500 performed better than NASDAQ-100, the index was down by over ~19% in 2022. Therefore, there are top beaten down stocks investors should buy right now so as to make the most of this rally.
Global equity markets behaved erratically in 2023 with frontline indexes going up and down (with more upside movements) as and when there were macro-economic and geopolitical developments. While there have been certain positive comments from the US Fed’s Chairman, investors and analysts try to figure out the timing of the interest rate cuts. Both the indexes, S&P 500 and Nasdaq Composite, touched their highest levels since the year 2022 as they increased by ~20.4% and ~38.6% through the end of 8th December, respectively.
In 2022, there were some stocks which have seen their worst performances. Meta Platforms, Inc. saw a decline of over ~64% in the previous year. Similarly, Amazon.com, Inc. and NVIDIA Corporation were down by ~50% each. Remarkable recovery in these technology stocks was due to some company and industry-specific factors including recent developments in generative AI, efficiency and cost-reduction measures, and higher margins. Therefore, just like these stocks, there are some top beaten down stocks investors should buy right now.
Given the strong Labor Department’s monthly jobs report which surpassed the expectations for the new job additions in the month of November, and the current year’s lowest core PCE increase, frontline indexes in the US saw a strong week. Therefore, this December-end rally is expected to continue and investors should consider going long on the stocks which are yet to perform well.
With this in mind, we will now have a look at top beaten down stocks investors should buy right now.
1. General Mills, Inc.
The company has been categorised as the leading global packaged food company, producing snacks, cereal, convenient meals, yogurt, dough, etc.
In 1Q24, its net sales came in at $4.9 billion, exhibiting a rise of 4%, with organic net sales growing by 4%. Operating profit of the company came in at $930 million, which was down by 14%. Adjusted operating profit was $899 million, exhibiting a rise of 2% in constant currency. The company saw growth in its revenues and profits in the first quarter. It saw moderating inflation, stabilization of supply chains, and resilient but increasingly cautious consumer.
Net sales growth was because of favourable net price realization and mix partially mitigated by reduced pound volume. Organic net sales of the company saw an increase of 4% due to positive organic net price realization and mix, which was partially offset by reduced organic pound volume. Gross margin of the company went up by ~540 basis points to reach 36.1% of net sales as a result of favorable mark-to-market effects and positive net price realization and mix. These were offset by the increased input costs.
Net earnings of the company came at $674 million, exhibiting a fall of 18% and its diluted EPS declined 16% to $1.14 as a result of reduced operating profit and increased net interest expense, partially offset by lower net shares outstanding.
2. Sarepta Therapeutics, Inc.
The company has been categorised as the biotechnology company, which is focused on treating rare, infectious, and other diseases.
It has reported financial results for 3Q23, with total revenues, including net product revenues and collaboration revenues, for 3Q coming at $331.8 million. Net product revenues for 3Q were $309.3 million, exhibiting a rise of 49% on the year-over-year basis. The increase in total revenues was mainly because of higher demand for EXONDYS 51, AMONDYS 45 and VYONDYS 53 and $69.1 million of net product revenues related to sales of ELEVIDYS during 3 and 9 months ended September 30, 2023.
Research and development expenses of the company came at $194.3 million for 3 months ended September 30, 2023 against $216.7 million for similar period of 2022, exhibiting a decline of $22.4 million.
3. Estee Lauder Companies, Inc.
The company has been categorised as the world leader in global prestige beauty market, and it participates across skincare, makeup, fragrance, and haircare categories.
In its 1Q24 results, it saw net sales of $3.52 billion, exhibiting a decline of 10% from $3.93 billion in the previous year.
Organic net sales of the company saw a fall of 11% mainly because of expected pressures in the company’s Asia travel retail business and increased headwinds from the slower-than-anticipated recovery of overall prestige beauty in mainland China.
The company saw net earnings of $31 million as compared to net earnings of $489 million in the prior year. Diluted net earnings per common share of the company came at $.09 as compared to $1.35 reported in the previous year.
Reported operating income came at $98 million, exhibiting a decline of 85% from $661 million in previous year. In constant currency, adjusted operating income saw a fall of 83%, exhibiting lower net sales and operating expenses and cost of sales.
Conclusion
While there are certain top beaten down stocks investors should buy right now, they are also required to keep in mind their time horizon and risk appetite.
It is impossible to judge all stocks on basis of similar factors throughout the board. Apart from broader macroeconomic factors, industry-specific and company-specific factors should play a critical role in performance of varied stocks. For example, a substantial portion of profits in 2023 is because of increase in certain leading stocks i.e., Apple, Inc., Amazon, Alphabet, etc.
Read Also: