If you like buying stocks while they’re on sale, there’s certainly no shortage of these names right now. This is true even if you limit your portfolio to the bluest of blue chips on the market. the Dow Jones Industrial Average is now down more than 6% from the January peak and is back to where it was trading midway through last year. It’s a distinct lack of progress caused by the fact that many Dow Jones voters are in the red for the period in question.
Not all of these losers necessarily deserve the losses they have suffered lately. Here’s a look at three ravaged Dow Jones stocks that are poised to rebound in a big way.
Certainly sportswear outfit Nike (NYSE: NKE) presents something of a conundrum for investors. Newly unpredictable demand in China – which accounts for around a fifth of its business – makes it difficult to handicap. At the same time, global supply chains are still crimped. It’s no wonder the then overbought stock is now 20% below the November high.
Now priced almost where it was nearly a year ago, this weakness has become too good an opportunity to pass up. It’s still the world’s number one athletic shoe brand, after all, and it’s no slouch on the apparel front either.
Of course, a little more certainty in China would be nice; however, it is not its biggest market, nor even its second market. Those honors still belong to North America and Europe, including the Middle East and Africa, which, by the way, saw sales growth in the quarter ending November as well as of the quarter ending in August. Also be aware that China’s headwind is a relatively recent phenomenon – barely around long enough to be considered a permanent problem.
In the meantime, the company continues to develop its own ways to connect with customers, online and offline. Sales made directly to customers rather than through third-party channel partners accounted for more than 40% of prior quarter revenue, up 8% year-over-year, while Nike’s digital sales improved 11% year-on-year over the same three-month period. stretch. This local progress is a key reason analysts are still expecting company-wide sales growth of nearly 6% this year, which is huge for an organization the size of Nike.
Down more than a third since peaking in November (and playing off fresh 52-week lows), shares of Salesforce.com (NYSE: CRM) seem to be radioactive for investors – no one wants to touch it. The more it falls, the more radioactive it seems to become.
As the old saying goes, expect the least you expect. The sell off here has been so sharp that a hard landing is likely, causing an equally large and equally rapid rally.
Salesforce.com is one of the world’s first cloud computing companies, providing sellers with browser-based, online access to customer databases. It’s still one of the world’s most prolific cloud computing companies, with more than 150,000 enterprise customers collectively contributing $21 billion in revenue in fiscal year 2021, up 24% from compared to 2020 revenue. That figure is expected to climb to more than $26 billion for the current year, on its way to nearly $32 billion for the next fiscal year. Profits are growing at a comparable rate.
Mind you, this title isn’t cheap…perhaps that’s one of the main reasons it’s been rocked over the past few weeks. At last look, the stocks are valued at more than 40 times their trailing and forward earnings.
However, this is a case where the growth rate more than justifies the premium.
Finally, add Honeywell International (NASDAQ: HON) to your list of battered Dow Jones stocks ready to rebound.
Honeywell is of course the iconic industry name that makes everything from thermostats to airplane parts to drug development technologies to plastic recycling solutions and more. None of this is particularly gripping. But, all of those are things you’d notice it missing if manufacturers suddenly stopped making it. This perpetual marketing is the main reason why this company is a reliable producer of revenue and profit. Indeed, Honeywell International has failed to exceed earnings estimates in any quarter at any time in the past four years, including the tricky period of 2020 when the pandemic began to spread across North America.
The company hasn’t received any credit from the stock market for this reliability lately, by the way, with shares down 15% from the January high and down 20% from the high. of August. Much of this loss can be attributed to Honeywell’s 2022 forecast released earlier this month. The company is looking for revenue of between $35.4 billion and $36.4 billion and earnings of between $8.40 and $8.70 per share. The revenue forecast is in line with estimates, but the earnings guidance range does not compare favorably to the analyst community’s collective estimate of $8.57.
I tend to believe that the worst might be over for Honeywell. After all, the company tends to post more profits than is generally believed. An earnings surprise could end up being the bullish psychological catalyst needed to start the stock’s rally.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.