TLDR
- The stock market is experiencing a correction with the S&P 500 down at least 10%, partly due to President Trump’s tariff announcements and trade policies
- Target (TGT) stock is down 65% from pandemic peak but has a P/E ratio of 10.5, suggesting potential for growth with its turnaround plan
- Micron (MU) is benefiting from the AI boom with data center revenue doubling and Nvidia as its biggest customer
- Companies near 52-week lows like Zoetis, Pfizer, and Nike may represent buying opportunities despite current market volatility
- Nike faces challenges from tariffs but has global diversification with 60% of revenue from outside the US and $10.4 billion in cash reserves
The stock market has entered a correction phase, with the S&P 500 down at least 10% from its recent peak. This decline comes in the wake of economic uncertainty sparked by President Trump’s tariff announcements on April 2, followed by a series of policy adjustments and trade tensions with China.
While investors may feel nervous about the market’s direction, long-term investors often view sell-offs as buying opportunities. Several stocks trading near their 52-week lows could present value for patient investors willing to look beyond current headwinds.
Target (TGT) has struggled to maintain momentum since the pandemic, with its stock down 65% from peak levels. The retailer reported flat comparable sales and earnings per share last year and expects similar results this year.
However, Target’s price-to-earnings ratio has dropped to just 10.5, suggesting the stock is priced for continued challenges. At this valuation, the stock could potentially double even without earnings growth and still trade at a discount to the broader market.
Turnaround Plans and Growth Potential
Target’s management has outlined a strategy to reinvigorate the brand. This includes focusing on owned brands like Cat & Jack and All in Motion, which have delivered solid growth. The company aims to recapture its “Tarzhet” cheap chic reputation that helped build its loyal customer base.
Target also plans new store openings and remodels with a goal to add at least $15 billion in sales over the next five years. If the company can return to its previous profit levels, the stock has room to rise substantially.
In the technology sector, Micron (MU) stands out as another potential bargain. The leading maker of computer memory chips trades at a P/E ratio of just 10 based on expected earnings, despite growing revenue by 38% in its most recent quarter.
Micron has become a key beneficiary of the artificial intelligence boom. Its data center revenue more than doubled, and Nvidia is now its largest customer. This partnership positions Micron well for continued growth in the AI sector.
The company could face pressure from economic headwinds and trade tensions. However, major tech companies driving AI spending recognize that investment in this area is essential for staying competitive.
Market Volatility Creates Bargains
The challenging start to 2025 for investors has pushed many quality stocks to attractive levels. Zoetis (ZTS), a global leader in animal health, has seen its stock drop near 52-week lows despite solid fundamentals.
Zoetis expects organic revenue growth of 6% to 8% for 2025, with similar increases in adjusted earnings per share. Expansion in emerging markets and new products awaiting regulatory approval should support future growth.
Pfizer (PFE) has struggled to find its footing after record COVID-19 sales in 2022. The stock has declined 29% over the past year as investors question its growth prospects beyond pandemic-related products.
Yet Pfizer showed promising signs in late 2024, delivering 11% year-over-year revenue growth in the fourth quarter, excluding COVID-19 products. Its oncology segment performed well with 27% growth, driven by therapies like Padcev, Adcetris, and Xtandi.
While waiting for a potential turnaround, shareholders receive a 7.6% dividend yield. Management has reaffirmed its commitment to maintaining and growing this payout.
Nike (NKE) has also faced challenges, with its stock down 28% year to date amid declining sales and concerns about tariff impacts on its supply chain. The footwear giant relies heavily on overseas manufacturing, which could face disruptions from trade policies.
Despite these headwinds, Nike maintains strong global diversification with nearly 60% of total revenue coming from outside the United States. The company also holds $10.4 billion in cash, providing flexibility to navigate challenges.
For investors willing to look beyond current market troubles, these beaten-down stocks could offer value. Their established market positions, financial strength, and growth plans may help them recover as economic conditions stabilize.
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