Buy the Dip! 3 Beaten-Down Stocks Poised for a Comeback.
The stock market might be at an all-time high, but that doesn’t mean there aren’t opportunities available to investors who want to buy low in the hopes of eventually selling high. In fact, one could argue that there are more deals to be had in the current market than at anytime in recent memory.
Because the gains in today’s market are heavily concentrated in technology stocks, especially those tied to artificial intelligence (AI), stocks of many well-known companies in other industries are down right now and look extremely cheap at current valuations.
Several of the most unloved stocks also offer investors big dividend yields and the promise of future gains. Buy-the-dip opportunities are also cropping up as corporate America reports its financial results for the fourth and final quarter of 2023. Rather than buy a tech stock that is at an all-time high, consider these stocks instead. Here is buy the dip! Three beaten-down stocks poised for a comeback.
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Texas Instruments (TXN)
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One of the few semiconductor stocks that’s not red hot right now is Texas Instruments (NASDAQ:TXN). The stock recently dipped 4% after the company issued forward guidance that missed Wall Street targets.
Over the last 12 months, TXN stock is down 3%. While the decline is disappointing, especially considering many of its peers have seen their share prices double or triple in the last year, there are some encouraging signs at the company.
While Texas Instruments forward guidance was weak, the company’s fourth-quarter results were not. The company reported earnings per share (EPS) of $1.49 for the final months of 2023. That beat Wall Street’s consensus estimate of $1.47. Revenue in the final quarter of last year came in at $4.08 billion, which was only slightly below forecasts of $4.12 billion. While demand for its microchips used in motor vehicles is expected to be soft this year, that weakness should be partially offset by a rise in consumer electronics.
TXN stock is also one of the only semiconductor stocks that pays shareholders a dividend. The quarterly payout is currently $1.30 a share, giving the stock a healthy yield of 3.08%.
AT&T (T)
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Speaking of dividends, how about telecommunications company AT&T (NYSE:T), whose stock currently has a sky-high yield of 6.55% (good for a quarterly payment of 28 cents per share)? The dividend can comfort shareholders as they wait for T stock to turnaround after years of consistent declines. In the last 12 months, AT&T’s share price has dropped 17%, bringing its five-year decrease to 27%. Despite the long-term underperformance, there may be a buy the dip opportunity here.
Although AT&T’s most recent earnings report disappointed, there was some encouragement to be found in the numbers. First, revenue in AT&T’s wireless phone unit rose 4% year-over-year. Second, the company’s number of new customers in Q4 of last year totaled 526,000, besting analyst expectations of 487,500. Also, the company continues to move away from its legacy wireline (landline phone) business, which posted a Q4 decline of 10% from a year ago.
It will take time, but AT&T’s single-minded focus on its wireless telecom business could eventually payoff.
Humana (HUM)
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Health insurer Humana (NYSE:HUM) has given investors a big dip to buy. Shares of the company plunged 11% after the company issued what can only be described as an ugly Q4 print. Humana reported a surprise loss of 11 cents per share on revenue of $25.60 billion. Wall Street had expected a profit of 89 cents a share on revenue of $25.50 billion. The loss was blamed on an increase in Medicare Advantage medical costs, as well as higher inpatient utilization rates.
HUM stock is now down 30% over the past year. The near-term outlook doesn’t look overly encouraging either, with the company forecasting earnings of $16 a share for all of 2024, far below the $29 expected amongst analysts. The good news is that Humana recognizes that its focus on the government-run Medicare Advantage program was a mistake and is now course correcting. Like the other names on this list, it will take time for HUM stock to turnaround, but investors who get in now could be rewarded.
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.
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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