Every once in a while, investors will come across a few relatively undeniable opportunities that cannot be passed by. Some of these opportunities begin with a selloff in a stock or a group of stocks. This is where investors can look past the noise and get to the nitty-gritty of what is actually happening behind the scenes.
Today, three stocks trade near their 52-week lows, a signal that could be taken as a potential buy opportunity under the right circumstances. The right circumstances could be fundamental trends, Wall Street analyst sentiment, and other metrics to ensure investors are buying quality stocks and not one of those “It’s cheap for a reason” names.
Stocks like Hershey Co. (NYSE: HSY), which belongs to the consumer discretionary sector but behaves more like a staple, offer stability, while companies like Celsius Holdings Inc. (NASDAQ: CELH) present future growth potential. Additionally, Intel Co. (NASDAQ: INTC), a former leader in the semiconductor industry, is working to regain its position as a top player. Here is why each of these beaten-down names could be smart buys for investors today.
This Price Level Makes Hershey's Stock a Long-Term Wealth Builder
With Hershey's stock trading within 5% of its 52-week low, investors should take a second look at this business since this price could allow them to compound their wealth in the coming years. The reason for this belief is found in the brand’s financials.
Starting with margins, Hershey’s brand shows its pricing power and market share through a 44.6% gross profit margin today. Being able to keep more money from each sale, Hershey’s management allocates this capital effectively enough to make a return on invested capital (ROIC) rate of over 25%.
This is one of the foundations for wealth compounding. As the capital reinvested in the company grows at these high rates, the stock price eventually will start to perform in accordance with the rising enterprise value underneath it. However, a profitable business can still be a bad investment at the wrong price.
Now that Hershey's stock trades at a price-to-earnings (P/E) ratio of only 20.6x, the stock shows investors that it is well below the longer-term average of 30x. This implies that the stock would need to expand its valuation multiple by roughly 50% today.
Analysts at the UBS Group would agree with this, as they recently placed a $209 price target on the company, directly calling for a net upside of as much as 15.5% from where it trades today.
Can Celsius Stock Meet Wall Street’s Expectations for a Double?
Celsius stock has recently fallen to a dismal 28% of its 52-week high. This should have scared most investors away while attracting a new wave of short sellers. However, that’s just not the case for this energy drink brand.
Those at Intech Investment Management decided to boost their holdings in Celsius stock by as much as 56.4% as of November 2024, bringing their position to a high of $1.4 million today. At the same time, investors can notice the downtrend in short interest for Celsius stock over the past quarter.
Today, Wall Street analysts keep a consensus price target of up to $54.4 a share on Celsius stock, which would call for a rally of just over 100% compared to today's low price. Investors could see these targets as bold, but markets are willing to agree with them by how they pay a premium valuation for the stock.
On a price-to-book (P/B) basis, Celsius stock trades at a multiple of 15.9x compared to the staples sector’s average valuation of only 6.1x. Now, some would call the stock expensive, but typically, a low stock price and a premium valuation multiple send a strong message.
That message is that the stock is a premium for a reason, and that reason will soon be reflected in a swift recovery from the stock price.
Why Intel Could Be a Big Winner in the New Business Cycle
Most semiconductor stocks have seen their winning days over the past cycle. The up-and-coming companies leveraged their relationships between the United States and Asia, making sure they had both feet betting on whatever outcomes may come.
However, there are now reasons to believe that the United States manufacturing sector is going to see a rebound in the coming quarters—at least, that’s what the price action in the basic materials stocks has to say. Of course, this will benefit Intel stock in a major way, as it has been one of the main players increasing its U.S. presence.
There’s a reason Qualcomm Inc. (NASDAQ: QCOM) sought to place a takeover bid for Intel. They know today’s valuation of only 49% of its 52-week high does not reflect the level of future business that could be headed its way.
Then investors can see how Wall Street analysts currently feel about the stock, with a consensus price target of up to $30.1 a share, or 20.1% upside from today’s low price. The analyst earnings per share (EPS) forecasts in Intel for the next 12 months back up a potential acquisition and upside targets.
While the company's net loss per share is $0.46 today, analysts think it could deliver up to $0.25 in EPS next year, which would be enough to give the stock the wealth compounder status investors look for.
