Winners and losers emerge from every earnings season. And this year’s second quarter has been no different. Some stocks such as Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) and Amazon (NASDAQ:AMZN) catapulted to 52-week highs on strong Q2 prints. Other stocks have sunk to fresh 52-week lows on disappointing financial results and downgrades to their forward guidance. Analysts have been busy in recent weeks lowering their price targets and ratings on stocks that underperformed with their second-quarter numbers. While this is no doubt disappointing, it presents an opportunity for investors who adhere to the principle of buy low and sell high.
The good news is that many great stocks are on sale right now and available to purchase at huge discounts relative to their long-term growth potential. Stocks of leading companies, many of which are household names, are undervalued coming out of earnings season and available to buy on the cheap. Several of these stocks remain great businesses despite posting poor quarterly results, which is often indicative of a near-term hiccup rather than a long-term problem. That the entire stock market has turned downward in August has only served to push the share prices of many great stocks to rock bottom prices. Here are seven stocks sitting at 52-week lows right now.
Target (TGT)
Blame the consumer. That’s essentially what discount retailer Target (NYSE:TGT) did when announcing that it missed its second-quarter revenue forecast and cut both its full-year sales and profit forecasts, saying consumers are refusing to spend on discretionary items at its store locations. Target said it now expects comparable sales to decline by mid-single digits for the full fiscal year and EPS to range between $7 and $8, down from an earlier estimate of $7.75 to $8.75.
The result of the poor earnings and lowered guidance is that TGT is now one of many stocks sitting at 52-week lows, having declined nearly 10% since the Q2 print. The company’s share price is down nearly 25% in the last 12 months. Target has struggled to win over shoppers in the face of rising inflation. Comparable sales in Q2 declined 5.4%. Worse, digital comparable sales fell 10.5% from a year earlier. Essential items such as groceries account for only 20% of Target’s revenue, making it susceptible to downturns when people cut back on discretionary spending.
On a positive note, the median price target on TGT stock is 20% higher than where the shares are currently trading.
General Motors (GM)
Down nearly 20% in the last six months, shares of automotive giant General Motors (NYSE:GM) are currently hovering near a 52-week low. Through five years, the company’s share price is now down 8%. Trading at just four times future earnings, GM stock looks both cheap and undervalued at current levels. This is all very disappointing, especially after the Detroit automaker issued better-than-expected Q2 financial results and raised its full-year guidance.
GM reported EPS of $1.91, which was better than the $1.85 consensus estimate from analysts who cover the company. Revenue for Q2 totaled $44.75 billion versus $42.64 billion that was expected on Wall Street. In addition to the earnings beat, General Motors also announced that it is increasing its cost-cutting measures, with plans to eliminate $3 billion in expenditures, up from $2 billion of cuts that were previously announced. Cost cutting will take place in sales and marketing, as well as in employee salaries.
GM joins the list of stocks sitting at 52-week lows as the company is in contentious labor negotiations with the United Autoworkers (UAW), its biggest union. However, the median price target on the stock is 35% higher than the current share price, providing some hope to current shareholders.
Walt Disney (DIS)
Walt Disney (NYSE:DIS) continues to struggle even with Bob Iger back at the helm. DIS stock declined to a 52-week low after posting a rare net loss for Q2 of this year. The Mouse House reported a net loss of $460 million, or 25 cents per share, for the quarter ended July 1, down from net income of $1.41 billion, or 77 cents a share, a year earlier. The net loss was attributed to a one-time $2.65 billion impairment charge related to Disney pulling content off its streaming platforms. Still, the result hasn’t sat well with analysts or investors.
Disney executives, led by Iger, did their best to make lemonade out of the lemons, announcing plans to raise prices on almost all of its streaming offerings as it strives for profitability in that business unit. However, the price increases came as Disney also announced that it had 146.1 million Disney+ subscribers as of July 1, a 7.4% decline from the previous quarter and a bigger drop than Wall Street forecasted. Management said they are exploring methods to further stop account sharing on Disney+ amid a widening crackdown.
Sadly, investors seem unwilling to look past the poor Q2 results and declining subscription numbers. Consequently, DIS stock is down 26% over the last year. That said, the median price target on the stock is 28% higher than the current share price with a consensus “buy” rating.
Bank of America (BAC)
Bank stocks have had a rough go of it this year. The entire sector has been pulled lower after the failures of regional lenders Signature Bank and Silicon Valley Bank this spring. More recently, the banking sector has been roiled by several downgrades on lenders by leading credit rating agencies S&P Global (NYSE:SPGI) and Moody’s (NYSE:MCO). These events are largely the reason why the stock of Bank of America (NYSE:BAC), the country’s second largest lender, is sitting at a 52-week low after declining 15% year-to-date.
Bank of America’s slump comes despite second-quarter results that beat Wall Street expectations on both the top and bottom lines. Citing higher income due to elevated interest rates, Bank of America reported EPS of 88 cents versus 84 cents that was expected by analysts. Revenue during the quarter came in at $25.33 billion compared to the forecasted $25.05 billion. Despite the strong print, Bank of America warned that its loan and deposit growth has slowed in recent months as the U.S. economy cools, casting a cloud over BAC stock.
Analysts clearly think the selloff in BAC stock has been overdone. The median price target on the company’s shares is 23% higher than where they’re trading right now.
Canopy Growth (CGC)
Cannabis producer Canopy Growth (NASDAQ:CGC) is in a bad spot with its share price having fallen 83% this year and now sitting both near a 52-week low and deep down on the penny stock league tables, trading at just 40 cents. The company’s latest earnings report only served to push CGC stock lower. Canopy Growth announced a $42 million net loss in its most recent quarter as it continues to restructure its operations and reduce costs amid declining sales.
For those searching for a silver lining, this year’s Q2 net loss was much better than the net loss of $2.1 billion reported a year earlier. Also, revenue in the most recent quarter rose 2% from a year ago to $121.1 million. The company said it managed to reduce its operating costs by $47 million in its latest quarter and noted that it is seeing higher revenues from its BioSteel sports drink. However, international medical cannabis sales, particularly in Israel, hurt financial results.
While down, CGC stock isn’t out. Not yet anyway. The median price target on this stock is 25% higher than current levels.
Hershey (HSY)
It seems wrong that chocolate maker Hershey (NYSE:HSY) is among the stocks sitting at 52-week lows after the company reported strong Q2 earnings and raised its quarterly dividend by 15%. But here we are. Founded in 1894, Hershey has paid an uninterrupted dividend to its shareholders since 1930. The latest increase brings the dividend yield on Hershey’s stock to 2.23%. The company, which sells nearly $10 billion worth of chocolate each year, announced the dividend hike along with stellar Q2 results.
Hershey said its Q2 profit increased to $407 million, or $1.98 a share, up nearly 30% from $316 million, or $1.53 a share, a year earlier. Analysts were calling for Q2 earnings of $1.89 a share. Revenue in Q2 came in at $2.49 billion, which was just a smidge below forecasts of $2.50 billion. Hershey reiterated that it expects full-year EPS of $9.46 to $9.54. Yet despite all the positives, HSY stock has declined 23% from an all-time high reached in May of this year.
Analysts don’t seem overly worried about the current pullback, which comes after a big run for the stock. The median price target on HSY stock is 22% higher than where the shares are currently changing hands.
Icahn Enterprises (IEP)
If there’s a surefire way to get yourself on the stocks sitting at 52-week lows list, it’s to cut the dividend payment by 50%. Just ask Carl Icahn. The stock of his holding company, Icahn Enterprises (NYSE:IEP), is languishing right around its 52-week low after the quarterly dividend payment was halved to $1 per share. The previous dividend payment of $2 a share gave Icahn Enterprises a dividend yield of more than 25%, the highest among stocks listed on the S&P 500 index.
The dividend cut arrives a few months after short seller Hindenburg Research released a critical report on Icahn Enterprises. Hindenburg accused Carl Icahn of operating a de facto Ponzi Scheme, using new investor money to pay a dividend set at what it called “unsustainable levels.” The dividend cut also comes as Icahn Enterprises reported Q2 financials that were much worse than expected, including a net loss of 72 cents a share. Wall Street forecasted a Q2 profit of 25 cents per share.
IEP stock is now down 62% on the year. However, the one analyst who continues to cover Icahn Enterprises’ stock sees upside ahead with a “buy” rating on the shares and a price target that is nearly 40% higher than current levels.
On the date of publication, Joel Baglole held long positions in GM, DIS, BAC and HSY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
