In this article, we will discuss the 10 Worst Beaten Down Stocks to Buy Now.
In 2024, the broader financial markets and economy stood up well amidst economic uncertainty, higher interest rates, and the US presidential election, according to Edward Jones, a financial services company providing wealth management, and other services. The US economic growth was consistently above trend, households continued to spend, inflation moderated, and the broader S&P 500 saw an increase of over 20% for the 2nd consecutive year.
What Lies Ahead?
As 2025 begins, much of the positive economic momentum from 2024 is expected to continue, although the pace of economic growth and US stock market gains might cool, according to Edward Jones. The firm expects that the US GDP growth will moderate but is likely to remain positive, courtesy of a healthy consumer and labor market. The conditions for US households are expected to improve moving forward, with the US Fed cutting the rates and inflation continuing to moderate. Furthermore, wage growth is expected to remain above inflation rates, exhibiting that consumers will continue to benefit from positive real wages.
Edward Jones expects that market leadership will broaden beyond the US mega-cap technology stocks in 2025, with investors looking for investments having increased domestic exposure and potential for growth in earnings and valuation expansion. It anticipates a balance in performance between value- and growth-style stocks, which strengthens the case for portfolio diversification.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
US Labor Market Trends in 2025
It seems that the main source of strength for the broader US economy is its resilient labor market. When consumers’ employment is secure, they feel confident when it comes to spending, and consumer spending accounts for ~70% of the US GDP, says Edward Jones. The firm expects that the US labor market seems to be normalizing. Just like the economic growth, it expects to witness a reacceleration of the labor market towards the end of 2025.
Notably, the reduced borrowing costs, higher use cases in AI, and potential pro-growth policies are expected to fuel hiring activity. The labor market outlook can also be influenced by the new immigration policy. In case of a significant reduction in the US labor force, there might be a supply shock. As per Edward Jones, this might force employers to increase wages, mainly in low-cost labor industries including restaurants, manufacturing, and hospitality.
Amidst such trends, investors are required to consider companies trading at low valuations and having healthy fundamentals, which strengthen the case for a positive long-term outlook.
With this in mind, let us now have a look at the 10 Worst Beaten Down Stocks to Buy Now.
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Our Methodology
To list the 10 Worst Beaten Down Stocks to Buy Now, we used a screener and chose the stocks that were trading close to their 52-week lows. Next, we filtered out the ones that analysts see significant upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of February 20. We also mentioned the hedge fund sentiment around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
10 Worst Beaten Down Stocks to Buy Now
10) PTC Inc. (NASDAQ:PTC)
Stock Price as of February 20: $161.6
52-week Low: $161.6
Average Upside Potential: ~28.5%
Number of Hedge Fund Holders: 56
PTC Inc. (NASDAQ:PTC) operates as a software company in the Americas, Europe, and the Asia Pacific. The company’s product portfolio spans critical areas including industrial software, which includes Product Lifecycle Management (PLM), Application Lifecycle Management (ALM), Internet of Things (IoT), and AR solutions. Therefore, this diverse offering places PTC Inc. (NASDAQ:PTC) well to capitalize on ongoing digital transformation trends throughout various industries.
With industrial companies ramping up their digital transformation initiatives, the company is expected to witness higher demand throughout its solution set. PTC Inc. (NASDAQ:PTC)’s Codebeamer product, in particular, is expected to act as a critical growth driver in the broader ALM space. Furthermore, the integration of ServiceMax into PTC Inc. (NASDAQ:PTC)’s portfolio can act as the next growth driver in the field service management market.
With industrial companies focusing on aftermarket services and predictive maintenance, its ability to provide end-to-end solutions, ranging from product design to service, can be a critical differentiator. PTC Inc. (NASDAQ:PTC) has also announced the release of the ServiceMax AI field service management assistant powered by GenAI. ServiceMax AI will help in enabling service organizations to modernize workflows and the technician experience.
9) L3Harris Technologies, Inc. (NYSE:LHX)
Stock Price as of February 2o: $199
52-week Low: $193.09
Average Upside Potential: ~30.8%
Number of Hedge Fund Holders: 48
L3Harris Technologies, Inc. (NYSE:LHX) offers mission-critical solutions for government and commercial customers. TD Cowen analyst Gautam Khanna maintained a bullish stance on the company’s stock, providing a “Buy” rating. The analyst’s rating is backed by robust financial guidance for the coming years and strategic initiatives. L3Harris Technologies, Inc. (NYSE:LHX) gave an initial 2025 sales forecast aligning with the market expectations. Notably, for 2025, the company is expecting revenues in the range of $21.8 billion – $22.2 billion and an adjusted FCF of $2.4 billion – $2.5 billion.
Also, the company continues to make strides in its cost-saving initiatives, which can enhance margins and efficiencies, potentially surpassing conservative margin guidance. The management’s focus on improving performance in legacy programs and enhancing the operational capacity further enhances L3Harris Technologies, Inc. (NYSE:LHX)’s prospects. The increasing international demand for defense technologies provides a strong growth opportunity for the company. L3Harris Technologies, Inc. (NYSE:LHX)’s strong position in areas like resilient communications, night vision systems, and solid rocket motors remains in line with global defense priorities. The success in international markets might offer L3Harris Technologies, Inc. (NYSE:LHX) economies of scale, resulting in improved margins and overall profitability.
8) PulteGroup, Inc. (NYSE:PHM)
Stock Price as of February 20: $103.1
52-week Low: $101.1
Average Upside Potential: ~30.9%
Number of Hedge Fund Holders: 40
PulteGroup, Inc. (NYSE:PHM) is engaged in the homebuilding business in the US. Analyst Rafe Jadrosich from Bank of America Securities reiterated a “Buy” rating on the stock and has a $134.00 price target. The company’s strategy to increase its land position via options contracts can enhance its financial performance in the coming years. The analyst further believes that with seasonal fluctuations impacting order numbers, PulteGroup, Inc. (NYSE:PHM)’s order activity in January remains aligned with typical seasonal patterns, reflecting improvement.
Elsewhere, UBS upped the company’s stock to “Buy” from “Neutral.” PulteGroup, Inc. (NYSE:PHM)’s gross margins and RoE are well-placed to continue leading peers, while the company’s current customer mix aids in profitability and offers some diversification in an ever-evolving homebuying market. The potential interest rate relief can benefit PulteGroup, Inc. (NYSE:PHM) over the long term. Notably, lower interest rates can make homeownership more accessible to a broader range of buyers, resulting in higher demand for the company’s business. Analysts at JPMorgan maintained an “Overweight” rating on the company’s stock as they believe that PulteGroup, Inc. (NYSE:PHM)’s stock valuation remains attractive as compared to peers, thanks to the potential for gross margins and return on equity.
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