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The S&P 500 is down about 2% year-to-date, but many large-cap stocks have been hit especially hard this past year.
These five beaten-down stocks are down more than 30% year-to-date and are poised for a rebound. These are stocks to buy now while they are on sale.
1. Whole Foods Market (NASDAQ: WFM) -33% YTD
Whole Foods Market missed analysts estimates in its most recent quarterly earnings report, and Wall Street pounced on the health and natural products store. Despite the miss, Whole Foods has the tools and resources for an exceptional rebound.
Millennials, who are known to be more willing to spend more on health and fitness, are a big part of Whole Foods customer base. The company knows how to appeal to the younger shoppers, and it is expanding its hold on the younger generations with the expansion of “365” stores. These stores are smaller, express locations, following Wal-Mart (NYSE: WMT) success with a similar small-store model. Whole Foods’ 365 stores dominate in small towns where they provides a more personal atmosphere than the large chain grocery stores.
The expansive supply chain and number of store locations is far larger for Whole Foods than any of its organic grocer competitors. That allows for better negotiation power with organic food providers. Although it has been a rough year for Whole Foods, it is positioned to turn around.
2. Abercrombie and Fitch (NYSE: ANF) -30% YTD
Abercrombie and Fitch is down 43% from its 52-week high. It has been a tough couple years for the fashion retail company. Fast-fashion companies like H&M and Forever 21 have proved to be tough competition for the company. During the peak time of the company, teens, its primary customer base, used to hang out in malls. Now the majority of teens purchase their clothes online. With sales plummeting, the retailer cannot afford to miss out on ecommerce.
In addition to adapting to the customers change in shopping behavior, the company has been working to change its brand reputation. The company is turning away from its preppy and frat brand image that had sent sales plummeting after bad press. It is reinventing itself with a minimalistic, trendy design, and so far, fashion blogs are receiving the new collection well and deeming Abercrombie “cool” again.
3. Applied Materials (NASDAQ: AMAT) -37% YTD
Applied Materials supplies equipment, services, and software to manufacture semiconductor, flat panel display and solar products. The company has had a bad year, but recent earning statements position it for improvement. Revenue growth came in higher than the industry average of 11.2%. Earnings per share improved by 12.5% in the most recent quarter, compared to the same quarter a year ago.
The company’s healthy financials that indicate much better performance than what it has experienced recently, making it a stock to buy now.
4. CenturyLink (NYSE: CTL) -32% YTD
CenturyLink plunged to its 52-week low at the beginning of the month. However, the Louisiana-based telecommunications company is still one of the stocks to buy for the long-term investor.
The company suffered from declines in its legacy businesses, local and long-distance voice businesses. However, this decline has eased off and no longer affects the company’s ability to grow. The company is making steady progress at improving its business mix.
Although CenturyLink’s earnings declined by 23.5% in the most recent quarter compared to the same quarter a year earlier, the company is now poised for EPS growth. Profit margins are expanding. It also has a healthy debt-to-equity ratio that is below the average for the telecommunications industry.
CenturyLink had to reckon with a changing market, but has worked to adapt and is now positioned for its rebound.
5. Hewlett-Packard (NYSE: HPQ) -28% YTD
Hewlett-Packard is an enormous company, generating more than $25 billion in revenue in its last quarter. However, the global software company is down 30% from its 52-week high, facing increasingly strong competition from companies like Apple (NASDAQ: AAPL) Despite the poor year, it is a stock positioned for a rebound, and the company currently has an attractive valuation.
One business in which Hewlett-Packard has huge potential for growth is its cloud IT market. The market created nearly $7 billion in sales during the second quarter and is one of the fastest -rowing markets. Currently, Hewlett-Packard owns 16.3% of this competitive market. The company is adding new products to its mix to stay competitive in the tablet market as well.
Its current price-earnings ratio of 12 makes it one of the attractive stocks to buy right now.
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