This market downturn is leading many investors to throw the baby out with the bath water. The stampede into cash has investors sleeping on many great stocks that are sitting at 52-week lows and available to buy at rock-bottom prices. Many amazing companies have seen their stocks dragged lower in the current bear market despite the fact that their earnings have held up , while they continue to grow their businesses. Companies are crushing earnings, issuing bullish forward guidance, increasing their share buybacks, and then seeing their stock price fall 5% or more. As a result, there are many sleeper stocks to buy before Wall Street wakes up.
Rather than worry, investors should take the opportunity to buy the stocks of exceptional companies now while prices are low and plan to sell the shares high when markets recover. Here are seven of the best sleeper stocks to buy before Wall Street wakes up.
Advanced Micro Devices (AMD)
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At $65 a share, semiconductor company Advanced Micro Devices (NASDAQ:AMD) stock looks as though it has been left for dead. Not only are the shares near a 52-week low, but they’ve fallen 60% from their 52-week high of $164.46 per share.
The steady erosion in the stock price completely ignores the fact that, despite the many challenges it has faced this year. AMD is killing it in the semiconductor space, continuing to post strong earnings and taking market share from its competitors such as Intel (NASDAQ:INTC).
For the second quarter, AMD reported earnings per share of $1.05 versus analysts’ average estimate of $1.03, according to Refinitiv data. The company’s revenue also beat mean expectations, coming in at $6.55 billion versus the average estimate of $6.53 billion.
AMD’s Q2 revenue was up 70% from a year earlier. All four of AMD’s business units grew during the April through June period. But despite the stellar results, investors seem to be looking past AMD for some inexplicable reason. Oh, and the company also repurchased nearly $1 billion of its own stock during Q2.
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The last two days have brought more pain for the shareholders of sneaker and sports apparel company Nike (NYSE:NKE). After announcing that its inventory ballooned in its fiscal first quarter and that it would discount merchandise and offer promotions to lower its inventory, NKE stock fell more than 10% on September 30, dragging the share price down to a fresh 52-week low of $82.50.
Nike’s stock has now fallen 49% this year with no bottom seemingly in sight after the inventory warning spooked investors. The share price has steadily declined with the stock market since November of last year.
The irony is that despite its inventory challenges, Nike actually beat analysts’ average expectations for its fiscal Q1 earnings. Specifically, NKE announced earnings per share of 93 cents compared to the 92 cents that analysts, on average, had expected. Its revenue came in at $12.69 billion versus the mean outlook of $12.27 billion.
The Oregon-based company continues to make progress in its transition to selling its sneakers and other products directly to customers rather than relying on third-party retailers. Plus, this past spring, Nike’s board of directors authorized a new four-year stock buyback program worth $18 billion.
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Believe it or not, you can now buy the shares of Google parent company Alphabet (NASDAQ:GOOGL) for less than $100. A 20-for-1 stock split in July of this year brought the share price down from around $1,800 to $120. But since the split, the share price has continued to slide lower. As a result, GOOGL stock is today changing hands at $98, which is not far from its 52-week low of $96. The shares of the technology giant are about 35% below their 52-week high.
However, unlike AMD and Nike, Alphabet’s decline is somewhat self-inflicted. In late July, Alphabet reported a rare earnings miss that rattled investors’ confidence in the company.
Specifically, Alphabet announced earnings per share of $1.21, while Wall Street was expecting $1.28. The disappointing results were mostly due to a decline in online advertising revenue, particularly at YouTube, which Alphabet owns.
However, Alphabet’s advertising revenue will rebound when inflation subsides and the economic outlook improves. Over the long-term, GOOGL stock is still a good name to own. And it’s currently available at fire-sale prices.
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Are things really that bad for Disney (NYSE:DIS)? One would assume so after looking at the company’s stock.
At $96 a share, DIS stock is nearly 50% below its 52-week high of $179.63. While it is true that the growth of the company’s Disney+ streaming service has slowed from the red-hot pace seen during the pandemic, its subscriptions reached 152.1 million during its most recent reported quarter. That was higher than the 147 million subscribers that analysts, on average, had expected. Also, Disney’s movies are back in theaters, and its theme parks and cruise ships are now fully operational for the first time in more than two years.
Disney also recently reported that it has more than 221 million streaming subscribers across its Disney+, Hulu, and ESPN+ platforms. That combined total enabled Disney to surpass industry leader Netflix (NASDAQ:NFLX), which has a total of 220 million subscribers, to become the new undisputed streaming champion.
All of this helps to explain why Disney’s most recent financial results obliterated analysts’ average forecasts. Specifically, it posted earnings per share of $1.09 versus the mean estimate of 96 cents. This is one sleeper stock that investors should start paying attention to.
Ford Motor Co. (F)
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The shares of iconic U.S. automaker Ford Motor Co. (NYSE:F) are down 47% this year and are fast approaching $10 a share. The shares are woefully undervalued and dirt cheap as their current price-earnings ratio is a very low 4.
And the stock offers shareholders a healthy quarterly dividend that yields 4.87%. Yet despite all this, F stock continues to be shunned by both Wall Street and Main Street. The reasons for that range from fears over the company’s waning sales, parts shortages, excess inventory levels and a potential recession. But for long-term investors, it would be wrong to ignore the company that Henry Ford built.
Short-term thinking is not factoring in the huge strides that Ford is making in electrifying its fleet of vehicles. In the last week alone, Ford announced that it was investing $700 million in and adding 500 jobs at its manufacturing plant in Kentucky. In all, Ford is investing $11.4 billion to build an electric F-150 assembly plant and three battery plants in Kentucky and Tennessee, creating more than 5,000 jobs in the process.
It’s all part of Ford’s efforts to catch and surpass its rival, Tesla (NASDAQ:TSLA), as the world’s leading EV maker. Investors might want to take a position in F stock before the company pulls into the lead in the global EV race.
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Cybersecurity is only getting more important as the world faces a growing number of online threats. Russia’s invasion of Ukraine, as well as high-profile attacks on companies such as Microsoft (NASDAQ:MSFT), has only heightened the need for governments and companies to guard against cyber criminals. This fact should put leading cybersecurity company CrowdStrike (NASDAQ:CRWD) front-and-center in the minds of investors.
But that hasn’t been the case in the last year. Over the past 12 months, CRWD stock has fallen 30% to $168 a share, and is now 44% below its 52-week high of $298.48.
Despite the weakness of its shares and the current macroeconomic challenges it’s facing, CrowdStrike has continued to grow its business and analysts continue to upgrade their ratings on the stock. The Texas-based company most recently reported earnings of 36 cents a share on revenue of $535.2 million.
That was much better than the EPS of 28 cents and the revenue of $516 million that Wall Street analysts, on average, had anticipated, according to data from FactSet. The company’s revenue grew nearly 60% versus the same quarter a year earlier.
CrowdStrike is also one of the few tech companies in the U.S. that is continuing to hire right now.
Goldman Sachs (GS)
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Goldman Sachs (NYSE:GS) is the leading investment bank in the U.S. As a result, the company finds ways to make money in any type of market. If you were looking to bet on a financial institution to keep its profits flowing during a market meltdown and and economic recession, you should bet on Goldman Sachs.
This is, after all, a company whose employees, junior and senior, routinely work 100 hours a week, proving that money really doesn’t sleep. One case in point: Goldman just established a new private-equity fund worth $9.7 billion, its largest since 2007. This came amidst the worst market downturn since the 2008-09 financial crisis.
But despite its pedigree as a deal and profit machine, Goldman Sachs’ stock is getting scant love from investors these days. In 2022, GS stock is down 26% and it’s trading at $294 a share.
The bank’s stock hasn’t been this low since the early days of the Covid-19 pandemic. Yet all signs suggest that Goldman will be able to emerge from the current market turmoil unscathed.
While the growth of its revenue from deals such as mergers and acquisitions and initial public offerings might have slowed, it is expanding its consumer banking business and earning more on loans as interest rates rise. Let’s see if investors will continue to ignore GS stock once the good times return to Wall Street.
On the date of publication, Joel Baglole held long positions in MSFT, GOOGL and DIS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
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