Over the past 18 months, shares of online used car dealer Carvana (NASDAQ:CVNA) staged a miraculous turnaround. Many expected to hear about a bankruptcy filing, not a rally. But beginning in January 2023, Carvana stock did just that and rocketed over 2,400% higher. The stock has already more than doubled so far this year. Furthermore, there are more beaten-down stocks you should consider.
This was a company that consistently lost money (it had never been profitable) and suffered from a lack of inventory due to an industry-wide shortage, high prices and soaring interest rates. Yet it just posted its “best financial results in company history,” including its third consecutive quarter of GAAP profits.
Finding such meteors to climb aboard isn’t easy, though long-time CVNA stock true believers might beg to disagree. But below are three companies ready to roar. They might not match the moonshot results of Carvana but these beaten-down stocks to buy should still juice your portfolio’s returns.
Beaten-Down Stocks to Buy: Starbucks (SBUX)
Slowing growth in China and difficult economic conditions here at home were a double whammy for Starbucks (NASDAQ:SBUX) stock. Shares are down 30% from their 52-week high and 22% below where they started the year. SBUX stock cratered on its first quarter report showing sales fell 2% to $8.6 billion while adjusted profits plunged 14% to 68 cents per share.
A cautious consumer is to blame for Starbucks hot stock cooling off. Especially among casual customers who don’t stop in everyday for a cup of joe and are pulling back on discretionary spending, the coffee shop is having a rough go.
Yet Starbucks has an incredibly loyal customer base and its digital-first efforts have been a marvel other businesses not even selling coffee try to emulate. As it revamps its business to enhance the in-store experience while boosting its menu with new drink options, the stock is attractively valued. It trades at an historically low 20 times earnings and at a price-to-sales ratio it hasn’t seen in over a decade. Look for Starbucks stock to zoom higher once again.
Tilray Brands (TLRY)
Marijuana stock Tilray Brands (NASDAQ:TLRY) is on a roller coaster ride featuring severe swings in sentiment. First, Germany legalized recreational use of cannabis. Tilray has its European headquarters located in Berlin and is a leading provider of medical marijuana to Germans. The country is also the largest cannabis market in Europe. Tilray is arguably the best-positioned pot stock to capitalize on legalization.
And now legalization is getting closer to reality in the U.S. We’re not there yet, but the Drug Enforcement Administration is proceeding to reschedule cannabis to Schedule III from Schedule I. While it was always ludicrous to have marijuana scheduled alongside heroin, LSD and MDMA (Ecstasy), common sense is finally catching up. And now a House of Representatives subcommittee is recommending the military stop testing recruits for marijuana use. Particularly with U.S. military readiness being compromised because of a lack of recruits, this could boost enlistment.
It is also an indirect boost to Tilray Brands and other marijuana stocks because it puts legalization of recreational use closer to reality. That will open up huge opportunities for this Canadian marijuana producer just waiting for the chance to jump into the U.S. market with both feet.
Tilray stock is down 10% year-to-date and 40% below its highs and ready for a fresh surge higher.
Norwegian Cruise Lines (NCLH)
Cruise line stocks were market darlings the past few years. Norwegian Cruise Lines (NYSE:NCLH) stock was sailing the high seas as pent up demand from the pandemic continued to spill over into higher bookings. Yet Norwegian also carried a premium valuation. So when its most recent earnings only gave solid results and not a perfect report, the cruise stock sold off.
Norwegian Cruise Lines stock is down 22% in 2024 and more than 30% below its 52-week high. That should be a sign for landlubber investors to come aboard. There are no icebergs in sight. Pricing is well ahead of even pre-pandemic levels and ships are operating at full capacity. There is no lack of demand for cruises.
Of course, it could be argued cruising has to compete with other forms of entertainment, particularly in a high inflation, high-interest rate environment. Yet cruise ships are an experience like no other. Moreover, many travelers prefer the unique and dynamic setting a cruise offers. Norwegian, with its freestyle format and attractive itineraries, will continue sailing high. Look for NCLH stock to ride the wave higher once again. Although these are beaten-down stocks, you should still consider adding all three of these to your portfolio.
On the date of publication, Rich Duprey did not hold (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.
