There are deals to be found in the current market. If the goal is to buy low and sell high, then investors should find lots to like among value and blue-chip stocks that have been beaten down and whose share price has been in the red over the past year. While the overall market remains not far from record highs, the gains continue to be uneven.
Many well-known and successful companies have stocks that look like steals after their share prices decline, dragging their valuation down with it. Plus, a lot of these beaten-down names have catalysts emerging that should drive their share prices upward in the near term. Investors should act now before many of these stocks reverse higher.
Here are three beaten-down value stocks poised for a massive comeback: July 2024.
Domino’s Pizza (DPZ)
Shares of Domino’s Pizza (NYSE:DPZ) have had a rough go of it lately. DPZ stock recently fell 13% in a day after the restaurant chain reported second-quarter revenue that missed Wall Street targets. For the quarter ended June 30, Domino’s posted EPS of $4.03, which was ahead of the $3.68 forecast among analysts. The company’s profit rose 30% from a year earlier.
However, the big profit beat wasn’t enough to offset revenue of $1.1 billion, which was slightly below analysts’ expectations, sending Domino’s stock plunging. Year-to-date, DPZ stock is completely flat (up 0.48%). However, the Q2 print from Domino’s included some encouraging signs. Domino’s, which owns more than 20,000 restaurants around the world, reported that its network sales increased 7.2% from a year ago. Same-restaurant sales grew 4.8% at U.S. stores and 2.1% at international locations.
The company is in the middle of a five-year growth strategy that includes plans to open 1,100 new restaurants through 2028 and boost annual sales by an average of 7%. Last year, Domino’s began listing its food on UberEats to bolster its delivery sales. The company also relaunched its loyalty rewards program. In Q2 of this year, Domino’s opened 228 new restaurants, mostly in international markets. There are good things happening at Domino’s Pizza and that should eventually be reflected in the share price.
Johnson & Johnson (JNJ)
Pharmaceutical giant Johnson & Johnson’s (NYSE:JNJ) stock appears to be improving after the company delivered Q2 financial results that beat Wall Street forecasts on the top and bottom lines. Johnson & Johnson reported EPS of $2.82, which beat forecasts of $2.71. Revenue in the April through June period totaled $22.45 billion, which topped Wall Street forecasts of $22.30 billion.
The strong Q2 print represents a turning point for Johnson & Johnson, whose finances have been impacted by years of litigation over consumer claims that its baby talc causes cancer. The company recently unveiled a plan to end the talc litigation for good, offering to pay as much as $11 billion to various plaintiff groups. Should the proposed settlement be accepted, it will remove a dark cloud from over Johnson & Johnson.
Johnson & Johnson’s stock has declined 10% over the last 12 months. An upsurge might not be far off for the company.
United Parcel Service (UPS)
Another beaten-down value stock is United Parcel Service (NYSE:UPS). Here too good things are happening that could turn around UPS stock. The company recently announced plans to sell its third-party logistics business to rival RXO (NYSE:RXO) for $1 billion. The unit that UPS sold, Coyote Logistics, is a freight broker that aggregates demand from customers who need shipping and supply from truckers.
Perhaps more important, UPS has been named the primary air cargo provider for the U.S. Postal Service, replacing rival Federal Express (NYSE:FDX). The current contract between FedEx and the U.S. Postal Service expires on Sept. 29 and UPS will take over. The deal with the U.S. Postal Service paid Federal Express $1.73 billion in 2023. That revenue will now flow to UPS.
The stock of UPS has declined 23% over the past year following a string of subpar financial results. But the sale of its third-party logistics business and a new contract with the U.S. Postal Service should help UPS stock turn a corner among beaten-down value stocks.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.