Stocks of a lot of well-known and historically great companies are on sale right now. Many marquee names haven’t shared in this year’s market rally and are in the red for 2023. This presents a fantastic opportunity for investors to buy great stocks at distressed prices.
For long-term investors, they can now buy beaten down stocks at a discount and great valuation, and benefit when the share price eventually recovers and climbs higher. Some of the most bruised stocks of 2023 already seem to be staging a comeback and are showing signs of life as we barrel into 2024.
Here are the seven most undervalued growth stocks to buy in December.
Nike (NKE)
Sneaker giant Nike (NYSE:NKE) just got an impressive upgrade ahead of its upcoming earnings report on Dec. 21. Analysts at Citigroup (NYSE:C) have upgraded the stock to a “buy” rating from “neutral” previously, and raised their price target on the shares to $135 from $110. Citigroup analyst Paul Lejuez said he is confident in the future of Nike as its China business recovers and its inventories decline following the Covid-19 pandemic.
Other tailwinds that Citigroup sees for Nike include lower freight costs, growth in its direct to consumer strategy, and improving margins. Nike and its stock have struggled coming out of the pandemic due to issues that have included bloated inventories, slowing sales in China, and production problems at its factories in Southeast Asia. Citigroup said it sees most of those issues being resolved over the coming year. NKE stock is flat in 2023 (up less than 1%). However, the share price is up 64% over five years.
Ford Motor Co. (F)
Ford Motor Co. (NYSE:F) has just announced that it is cutting the 2024 production of its fully electric F-150 Lightning pick-up truck in half following a costly strike by the United Auto Workers (UAW) union. The new production plan calls for 1,600 F-150 Lightning pick-up trucks to be made a week at Ford’s main plant in Dearborn, Michigan. Previously the automaker planned to produce as many as 3,200 F-150 Lightning trucks per week in 2024.
Following a costly six-week strike by the UAW, Ford has canceled or postponed $12 billion worth of electric vehicle investments. Electric vehicle demand has been slower than the auto industry expected, as prices and interest rates remain elevated. However, sales of the F-150 Lightning have steadily increased in 2023, recording a monthly record of 4,400 sales in November. The gasoline-powered version of the F-150 pick-up truck has been among the bestselling vehicles in North America every year since 1976.
F stock is down 5% in 2023 but shows signs of improving now that the UAW strike is over.
Hasbro (HAS)
Toymaker Hasbro (NASDAQ:HAS) is struggling, but management is trying to turn things around. The company just announced that it is laying off 1,100 workers as weak toy sales persist into the holiday shopping season. Hasbro began 2023 with 6,300 employees. Earlier in the year, the company let go 800 staff as sales of its toys that include “Transformers,” “Nerf” products, and “My Little Pony” slumped. Now, the company is further reducing its headcount as it tries to right its own ship.
Hasbro warned in October that it was seeing a slowdown in sales and that demand for toys was weakening. In its most recent quarterly earnings, Hasbro lowered its full-year guidance, saying it expects a 15% sales decline for the current fiscal year. The company said that typically reliable brands such as “Nerf” are no longer selling as well and that overall sales had fallen 18%. HAS stock fell 2% on news of the latest layoffs, bringing its year-to-date decline to 23%. But a turnaround appears underway.
Walt Disney Co. (DIS)
You can’t say they’re not trying over at the Magic Kingdom. Walt Disney Co. (NYSE:DIS) just reinstated its dividend payment to shareholders after a three year suspension. The world’s biggest entertainment company announced that it will pay a dividend of 30 cents a share to stockholders of record as of Dec. 11. The payment will be issued in January 2024. Disney had suspended its dividend in early 2020 at the onset of the COVID-19 pandemic.
The dividend’s return is just the latest step that Disney has taken to try to turn its business around and get DIS stock moving in the right direction again. The company has also let go more than 7,000 workers, raised prices on its Disney+ streaming platform at its theme parks, introduced advertisements to its streaming service, and cutback its content spend. So far, DIS stock hasn’t responded and is down 4% over the last 12 months. However, there is reason to believe the magic will return to Disney in the coming year.
Boeing Co. (BA)
Aircraft manufacturer Boeing Co. (NYSE:BA) has just appointed a chief operating officer (COO), the first in the company’s history. Stephanie Pope is taking on the newly created COO role and is seen as a candidate to replace CEO David Calhoun when he retires. Pope currently heads the aftermarket business unit called “Boeing Global Services”, which was the only segment at the company to report a profit through the first nine months of 2023.
Calhoun, who has steered Boeing through one of its most difficult periods after multiple deadly crashes and the Covid-19 pandemic, is expected to remain at the helm of the company for at least another year. Pope assumes the new COO job on Jan. 1. Having joined Boeing in 1994, Pope has worked in all of the company’s business units over the years. Also believed to be in the running to succeed Calhoun are Boeing chief financial officer (CFO) Brian West and head of commercial airplanes Stan Deal.
BA stock is on the mend, having increased 28% in 2023. However, the share price is currently trading 22% lower than where it was five years ago. The company continues to enjoy a duopoly position in the market for commercial aircraft along with Airbus SA of France.
Occidental Petroleum (OXY)
Tough times in the oil patch. The price of crude has now fallen to $68 a barrel from more than $90 earlier in 2023. The price decline has pressured oil stocks, including Occidental Petroleum (NYSE:OXY). However, management at Occidental isn’t letting the slumping price of crude oil keep them from building the future of the company. Occidental Petroleum just announced that it is buying privately held energy producer CrownRock in a deal worth $12 billion.
The deal, which is winning praise on Wall Street, will boost Occidental’s acreage in the oil-rich Permian basin of Texas. Specifically, the CrownRock deal will provide Occidental Petroleum with more than 94,000 net acres of land in the Permian basin, which is the largest and richest oil area in America. The deal is expected to close in the first quarter of 2024 and will be immediately accretive to Occidental Petroleum’s cash flow. Occidental also raised its quarterly dividend to 22 cents a share from 18 cents previously.
OXY stock is down 10% this year due to the slide in crude oil prices. Any rise in the price of crude is sure to lift this stock with it.
AbbVie (ABBV)
Speaking of acquisitions, drug maker AbbVie (NYSE:ABBV) is buying neuroscience pharmaceutical specialist Cerevel Therapeutics (NASDAQ:CERE) for $8.7 billion. AbbVie has agreed to pay $45 for each share of Cerevel and plans to complete the purchase by the middle of next year. The acquisition represents the latest effort by AbbVie to expand its prescription drug portfolio as its top-selling arthritis medication, Humira, loses its patent protection.
Recently, AbbVie agreed to buy cancer drug maker Immunogen (NASDAQ:IMGN) for $10 billion. Cerevel Therapeutics will enhance AbbVie’s psychiatric and neurological disorder medications. AbbVie will also gain access to experimental treatments for schizophrenia and Alzheimer’s disease. Humira has long been one of the top selling medications in the world, racking up annual sales of $21 billion in 2022 alone. But it now faces competition from generic versions, requiring AbbVie to look elsewhere for future growth.
ABBV stock has declined 6% in 2023 though it has rebounded and gained 10% in the last month.
On the date of publication, Joel Baglole held a long position in DIS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
