13 Best Beaten Down Stocks To Buy Now
In this article, we will be taking a look at the 13 best beaten down stocks to buy now. To skip our detailed analysis of the US stock market and recent developments within it, you can go directly to see the 5 Best Beaten Down Stocks To Buy Now.
The Two-Day Fed Meeting
On September 19, the US Federal Reserve kicked off its two-day meeting, leaving investors in a state of anticipation over what to expect next. Some argue that the Fed is not likely to hike rates again, while others provide an alternative response. Regardless of which camp ends up being right about this matter, it is indisputable that the Fed's September decision will immensely impact the market and those who hold a stake in it, making this a topic of interest for major stakeholders across the country.
CNBC's 'Halftime Report' discussed this topic on September 19. Josh Brown, the CEO at Ritholtz Wealth Management, was among the experts invited on CNBC to comment on the situation on the ground right now. Here's what he had to say:
"If we do still have more hurdles, and even possibly more rate hikes, that's gonna come because of what's going on with oil and gasoline prices - my opinion. You do have the stickiness in wages, you may not have the same rate of inflation but wages aren't going back down. You have the same phenomenon in shelter, particularly in rentals. That's not going back down. That stickiness is with us."
Brown continued to discuss how WTI crude oil and gasoline prices are on the rise at the moment. He noted that historically, recessions have almost always been preceded by "an oil price shock" or a "spike." However, for him, the recent increases in oil prices are not at that level yet - they have merely moved up gradually. And this factor is why Brown does not believe that the Fed is done with its rate hikes just yet.
Where Should Investors Put Their Money?
Investors should keep in mind that, at the moment, the markets are still in an unpredictable phase. The fact that the Fed's September decision is also just on the horizon means that investors should be extra careful with where they put their money. Karen Firestone, the CEO of Aureus Asset Management and a renowned portfolio manager, made the following comments on CNBC's 'Halftime Report' with regards to portfolio management:
"What I feel is most important is to have a portfolio that encompasses companies that are going to have earnings growth that's greater than expected. You know, we can start seeing some earnings accelerations. And I think this is the first time in quite a long time that estimates are moving higher."
Companies with high earnings growth can thus be good bets for many investors during the second half of the year. However, another cohort of stocks some should look into is that of beaten-down stocks that have recently hit their 52-week lows. If investors can find a few companies that have proven their worth historically in terms of earnings growth and other fundamentals but are struggling in the market at present, they can probably come up with a portfolio of stocks that are reliable for the future and that can be bought at a bargain right now. Some such stocks include Target Corporation (NYSE:TGT), Bristol-Myers Squibb Company (NYSE:BMY), and Pfizer Inc. (NYSE:PFE). There are many others that we have mentioned in our list below as well. These include some of the best stocks to buy now in 2023 and some of the best growth stocks to buy now.
Photo by Austin Distel on Unsplash
Our Methodology
We used a stock screener to find stocks that had hit their 52-week lows around September 18 and then shortlisted 13 stocks by using Insider Monkey's hedge fund data for the second quarter. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest number.
Best Beaten Down Stocks To Buy Now
13. Macy's, Inc. (NYSE:M)
Number of Hedge Fund Holders: 33
On August 23, Brooke Roach, an analyst at Goldman Sachs, maintained a Buy rating on shares of Macy's, Inc. (NYSE:M). The analyst also placed a price target of $17 on the stock.
Macy's, Inc. (NYSE:M) is a broad-line retail company based in New York. The company operates stores, websites, and mobile applications in the US through which it sells merchandise such as apparel, accessories, and cosmetics, among more.
There were 33 hedge funds long Macy's, Inc. (NYSE:M) in the second quarter. Their total stake value in the company was $675.1 million.
Like Target Corporation (NYSE:TGT), Bristol-Myers Squibb Company (NYSE:BMY), and Pfizer Inc. (NYSE:PFE), Macy's, Inc. (NYSE:M) is a beaten-down stock that is highly popular among elite hedge funds today.
12. Incyte Corporation (NASDAQ:INCY)
Number of Hedge Fund Holders: 37
Incyte Corporation (NASDAQ:INCY) is a biotechnology company that discovers, develops, and commercializes therapeutics for the hematology or oncology and inflammation and autoimmunity areas. It is based in Wilmington, Delaware.
Reni Benjamin, an analyst at JMP Securities, reiterated a Market Outperform rating on shares of Incyte Corporation (NASDAQ:INCY) on August 2. The analyst also maintained a $93 price target on the stock.
We saw 37 hedge funds long Incyte Corporation (NASDAQ:INCY) in the second quarter, with a total stake value of $3.2 billion.
Holding 36.2 million shares in the company, Baker Bros. Advisors was the largest shareholder in Incyte Corporation (NASDAQ:INCY) at the end of the second quarter.
11. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY)
Number of Hedge Fund Holders: 37
Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) was spotted in the 13F holdings of 37 hedge funds at the end of the second quarter. Their total stake value in the company was $565 million.
Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) is another biotech company on our list. It develops novel therapeutics based on ribonucleic acid interference. The company is based in Cambridge, Massachusetts.
A Buy rating was reiterated on shares of Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) on September 18 by Patrick Trucchio, an analyst at HC Wainwright & Co. The analyst also maintained a $405 price target on the stock.
This is what ClearBridge Investments said about Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) in its fourth-quarter 2022 investor letter:
“Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), a biotech that develops RNA therapies to target and turn off certain proteins in the body, has a number of drugs in market whose revenues are expected to end the excessive cash burn that has plagued the company’s shares. As more drugs are launched and pipeline investments are more focused under new leadership, we believe the company will be an increasingly attractive asset.”
10. Dollar Tree, Inc. (NASDAQ:DLTR)
Number of Hedge Fund Holders: 37
Mantle Ridge LP was the most prominent shareholder in Dollar Tree, Inc. (NASDAQ:DLTR) at the end of the second quarter, holding 11.4 million shares in the company.
Dollar Tree, Inc. (NASDAQ:DLTR) is a consumer staples and merchandise retail company that is based in Chesapeake, Virginia. The company operates discount variety retail stores.
Guggenheim analyst John Heinbockel reiterated a Buy rating on shares of Dollar Tree, Inc. (NASDAQ:DLTR) on August 30. The analyst also maintained a price target of $155 on the stock.
A total of 37 hedge funds were long Dollar Tree, Inc. (NASDAQ:DLTR) in the second quarter, with a total stake value of $2.8 billion.
Madison Investments said the following about Dollar Tree, Inc. (NASDAQ:DLTR) in its second-quarter 2023 investor letter:
“The bottom five individual contributors for the quarter were U.S. Bancorp, Progressive, Analog Devices, Dollar Tree, Inc. (NASDAQ:DLTR), and Danaher. Off-price retailer Dollar Tree’s margins disappointed this past quarter. Like much of the retail industry, they are contending with higher costs related to shrink as well as the mix of sales shifting away from higher margin areas towards lower margin categories like grocery. Despite the near-term disappointment, we remain optimistic that the company can improve its profit performance. New Chairman and CEO Richard Dreiling has completely overhauled the management team with an impressive roster of retail executives, and they are spearheading a great number of initiatives that should bear fruit over the coming years.”
9. Tower Semiconductor Ltd. (NASDAQ:TSEM)
Number of Hedge Fund Holders: 38
Tower Semiconductor Ltd. (NASDAQ:TSEM) is a semiconductor company that focuses on specialty process technologies to manufacture analog-intensive mixed-signal semiconductor devices. The company is based in Israel.
Tower Semiconductor Ltd. (NASDAQ:TSEM) was seen in the portfolios of 38 hedge funds at the end of the second quarter. Their total stake value in the company was $561.8 million.
Shares of Tower Semiconductor Ltd. (NASDAQ:TSEM) were upgraded from Hold to Buy on August 17 by Richard Shannon, an analyst at Craig-Hallum.
8. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 43
Mark Strouse at JPMorgan maintains an Overweight rating on shares of SolarEdge Technologies, Inc. (NASDAQ:SEDG) as of September 15. The analyst also placed a $299 price target on the stock.
In total, 43 hedge funds were long SolarEdge Technologies, Inc. (NASDAQ:SEDG) in the second quarter, with a total stake value of $1.3 billion.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) is a semiconductor materials and equipment company that develops, designs, and sells direct current optimized inverter systems for solar photovoltaic installations. It is based in Israel.
D E Shaw was the largest shareholder in SolarEdge Technologies, Inc. (NASDAQ:SEDG) at the end of the second quarter, holding 1.5 million shares in the company.
7. Illumina, Inc. (NASDAQ:ILMN)
Number of Hedge Fund Holders: 43
Our hedge fund data for the second quarter shows 43 hedge funds long Illumina, Inc. (NASDAQ:ILMN). Their total stake value in the company was $1.1 billion.
Illumina, Inc. (NASDAQ:ILMN) is a healthcare company based in San Diego, California. The company manufactures life science tools and integrates systems for large-scale analysis of genetic variation and function.
An Outperform rating was reiterated on shares of Illumina, Inc. (NASDAQ:ILMN) on September 1 by Vijay Kumar, an analyst at Evercore ISI Group. The analyst also maintained a price target of $240 on the stock.
RiverPark Advisors made the following comments about Illumina, Inc. (NASDAQ:ILMN) in its second-quarter 2023 investor letter:
“Illumina, Inc. (NASDAQ:ILMN): Illumina was our top detractor in the quarter despite reporting first quarter results that were generally in line with expectations and reaffirming full-year guidance. Uncertainty around activist investor Carl Icahn’s impact on the business, the change of CEO and the possible forced divestiture of liquid biopsy subsidiary Grail (early-stage cancer screening via blood samples) all weighed on Illumina’s stock price.
We continue to view the company’s core genomics industry as offering one of the larger total addressable markets that we cover, and ILMN is the clear innovation leader in sequencing and array-based solutions for genetic analysis. With less than 0.02% of humans having been sequenced and 99% of the variants discovered in the genome having not yet been deciphered, Illumina, at less than $5 billion of TTM revenue, is still in its infancy in what is potentially a greater than $50 billion genetics analysis tools market opportunity. We believe Carl Icahn’s involvement is neutral to slightly positive to the extent he can help the company be more disciplined on expenses. We are cautiously optimistic that EU regulators’ push to force Illumina to divest Grail will lead to either or both 1) much higher core earnings or 2) a big valuation for Grail in a sale. We added to our ILMN position during the quarter; it is a core holding.”
Like Target Corporation (NYSE:TGT), Bristol-Myers Squibb Company (NYSE:BMY), and Pfizer Inc. (NYSE:PFE), Illumina, Inc. (NASDAQ:ILMN) is a stock that is popular among many institutional investors and hedge funds today.
6. Target Corporation (NYSE:TGT)
Number of Hedge Fund Holders: 45
There were 45 hedge funds long Target Corporation (NYSE:TGT) in the second quarter, with a total stake value of $882.9 million.
Joseph Feldman, an analyst at Telsey Advisory Group, maintained an Outperform rating on shares of Target Corporation (NYSE:TGT) on August 17. The analyst also placed a price target of $162 on the stock.
Target Corporation (NYSE:TGT) is a consumer staples company based in Minneapolis, Minnesota. The company offers apparel, jewelry, accessories, and shoes, among more.
Holding 2.9 million shares in the company, Citadel Investment Group was the most prominent shareholder in Target Corporation (NYSE:TGT) at the end of the second quarter.
Diamond Hill Capital said the following about Target Corporation (NYSE:TGT) in its second-quarter 2023 investor letter:
“We also purchased an ownership stake in Target Corporation (NYSE:TGT) , the US-based mass retailer. The company has experienced strong traffic growth over the past several years but was disproportionally impacted by poor internal inventory forecasting in 2022, which caused near-term profitability to be negatively impacted. As near-term headwinds subside, we believe Target can restore its margin profile on a sales base that has seen a significant increase since the beginning of the pandemic. The recent stock price sell-off related to near-term controversy concerns allowed us to initiate a position at an attractive discount to our estimate of intrinsic value. Looking past the next couple of quarters, we believe Target is well positioned to gain share longer-term due to its merchandising acumen, real estate locations and omnichannel capabilities.”
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Disclosure: None. 13 Best Beaten Down Stocks To Buy Now is originally published on Insider Monkey.
