In this article, we discuss the 11 best beaten down stocks to buy today. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Beaten Down Stocks To Buy Today.
Growth stocks have taken a beating in the past few days after the United States Labor Department released figures that indicated the biggest jump in consumer prices in the US over three decades. The NASDAQ dropped 1% following the release of the data and unprofitable technology stocks suffered as investors prepared to remove risky bets from their portfolios. According to a report by news publication Bloomberg, a Goldman Sachs list of growth equities has tumbled 4% in the past four weeks as inflation concerns mount.
Meanwhile, shares of industries that are traditionally considered “safe havens” during times of crisis, like utilities, consumer staples, and gold, have been soaring. The impending collapse of real estate giant Evergrande has also hit the market. However, the government has yet to react to these developments, leading to speculation that these issues might be normal for an economy emerging out of the pandemic crisis. Investors who want to take advantage of the slowdown could grab several top stocks at incredible bargains should they wish to invest.
Some of the top beaten down stocks to buy today include Activision Blizzard, Inc. (NASDAQ:ATVI), Peloton Interactive, Inc. (NASDAQ:PTON), and Biogen Inc. (NASDAQ:BIIB), among others discussed in detail below.
Our Methodology
These were picked based on the percentage decline in share price over the past few weeks. Business fundamentals and analyst ratings were considered to identify those companies that have the best chance of rebounding from short-term headwinds. Hedge fund sentiment was also included as a classifier.
The hedge fund sentiment around each stock was calculated using the data of 873 hedge funds tracked by Insider Monkey.
Photo by Adam Nowakowski on Unsplash
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Beaten Down Stocks To Buy Today
11. Check Point Software Technologies Ltd. (NASDAQ:CHKP)
Number of Hedge Fund Holders: 29
Percentage Loss in Share Price over Past Three Months: 4.91%
Check Point Software Technologies Ltd. (NASDAQ:CHKP) markets information technology security solutions. Although the firm has beaten market estimates on earnings in the past two quarters, analysts still view the stock with caution. Wells Fargo recently initiated coverage of the stock with an Underweight rating and a price target of $110, noting that the subscription growth for the firm was in the low single digits percentage and “underperforming peers”.
However, in light of favorable tailwinds for the cyber security industry in general, others, like Deutsche Bank analyst Patrick Colville, expect Check Point Software Technologies Ltd. (NASDAQ:CHKP) to post strong earnings amid “buoyant” spending in the sector. The analyst has a Buy rating and a $136 price target on the stock.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in Check Point Software Technologies Ltd. (NASDAQ:CHKP) with 1.1 million shares worth more than $134 million.
Just like Activision Blizzard, Inc. (NASDAQ:ATVI), Peloton Interactive, Inc. (NASDAQ:PTON), and Biogen Inc. (NASDAQ:BIIB), Check Point Software Technologies Ltd. (NASDAQ:CHKP) is one of the stocks on the radar of elite investors.
In its Q1 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and Check Point Software Technologies Ltd. (NASDAQ:CHKP) was one of them. Here is what the fund said:
“Another software holding, Israeli security firm Check Point, saw its shares fall after announcing that investments to fund its future growth will reduce margins this year.”
10. Dow Inc. (NYSE:DOW)
Number of Hedge Fund Holders: 40
Percentage Loss in Share Price over Past Three Months: 6.30%
Dow Inc. (NYSE:DOW) works in the commodity chemical industry. After posting market-beating earnings results for the third quarter in late October, the CEO of the firm, (, said that supply chain disruption, which had affected the export of chemicals and hit the stock price in the third quarte/(r, was expected to last well into 2022. According to the executive, the order backlog of the company was at 30% due to these issues.
However, Dow Inc. (NYSE:DOW) is expected to offset some of the damage from these problems as the demand for the products it sells, along with their prices, rises steadily in the post-pandemic economy.
At the end of the second quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth $518 million in Dow Inc. (NYSE:DOW), down from 41 in the previous quarter worth $717 million.
9. Penn National Gaming, Inc. (NASDAQ:PENN)
Number of Hedge Fund Holders: 40
Percentage Loss in Share Price over Past Three Months: 17.86%
Penn National Gaming, Inc. (NASDAQ:PENN) stock has nosedived in recent days, sinking to a 52-week low on November 4 after news publication Business Insider posted allegations of misconduct against Dave Portnoy, a key shareholder in the company. The company has already clarified the stance it has on the matter, refusing to divulge into personal matters of stakeholders.
Analysts are still bullish on Penn National Gaming, Inc. (NASDAQ: PENN), with Credit Suisse and Deutsche Bank recently noting that the sell-off of the stock in light of the Portnoy news was only a near-term setback for the company.
At the end of the second quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth 1 billion in Penn National Gaming, Inc. (NASDAQ:PENN), down from 42 in the previous quarter worth $907 million.
In its Q1 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Penn National Gaming, Inc. (NASDAQ:PENN) was one of them. Here is what the fund said:
“Shares of regional casino operation Penn National Gaming, Inc. increased in the quarter on strong share gains in the online sports betting and gaming markets in Michigan and the opening of the large Illinois online sports betting market. Strong sequential growth in revenue and sustained margin improvement in its brick and mortar operations also helped boost the share price. We think these positive developments will lead to improvements in the company’s balance sheet and its EBITDA to free cash flow conversion.”
8. Deere & Company (NYSE:DE)
Number of Hedge Fund Holders: 52
Percentage Loss in Share Price over Past Three Months: 7.29%
Deere & Company (NYSE:DE) makes and sells agricultural and farm equipment. The stock has taken a beating in the past few weeks due to a strike by workers that are demanding a raise and other benefits in light of inflation. In early November, the company presented the striking workers with a new labor deal with a 30% raise and other adjustments, saying it was the “best and final offer” it could make while being competitive at the market. The offer has not yet been accepted.
Deere & Company (NYSE:DE) has promised that it has prepared to deal with the needs of the customers during harvest season even with the strike, and is exploring all possible options to bring the striking workers back as soon as possible. Analyst expects a deal to be reached soon between the two parties.
At the end of the second quarter of 2021, 52 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in Deere & Company (NYSE:DE), up from 51 in the previous quarter worth $2 billion.
In its Q1 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and Deere & Company (NYSE:DE) was one of them. Here is what the fund said:
“John Deere delivered stronger-than-expected quarterly earnings and raised its guidance for the full-year. Sales of Deere’s tractors and combine harvesters are underpinned by Chinese demand for agriculture products and the bioethanol market rebounding with oil prices.”
7. The TJX Companies, Inc. (NYSE:TJX)
Number of Hedge Fund Holders: 56
Percentage Loss in Share Price over Past Three Months: 4.65%
The TJX Companies, Inc. (NYSE: TJX) is one of many retailers who have seen share prices plummet recently due to supply chain concerns that have left both analysts and customers concerned about empty shelves during the holiday season. There are even some issues with staffing, according to Loop Capital analyst Laura Champine who has a Hold rating on the stock with a price target of $65.
However, The TJX Companies, Inc. (NYSE: TJX) has strong fundamentals and recently earned an upgrade from Gordon Haskett, which expects the company to silence doubters with a strong earnings report for the third quarter due soon.
At the end of the second quarter of 2021, 56 hedge funds in the database of Insider Monkey held stakes worth $2.38 billion in The TJX Companies, Inc. (NYSE:TJX), down from 63 in the preceding quarter worth $2.34 billion.
Giverny Capital, in their Q1 2021 investor letter, mentioned The TJX Companies, Inc. (NYSE:TJX). Here is what the fund said:
“We’re pretty happy with the current portfolio and so were not very active during the quarter. Our only consequential decision in the first quarter was to exit the off-price retailer The TJX Companies in January. My prior firm owned TJX for most of the past 20 years and enjoyed appreciation on the order of 20 times the original purchase price.
TJX is a great company, but the growth rate has slowed in recent years and the operating margin has been under pressure, mainly from rising wages for store workers. When the pandemic hit, I bought the stock for GCAM in the belief that if the US fell into a prolonged recession, TJX would be a winner because of its extreme value position.
The US didn’t fall into a prolonged recession. Rather, many consumers are flush with cash thanks to government relief programs. But brick-and-mortar stores are losing out to online competitors for reasons of safety and convenience. TJX has fared much better than most of its competitors during this time and should continue to do so, thanks to its model of buying inventory close to need and reacting to what is happening in the marketplace rather than trying to create hot product. But the stock rose about 50% in the few months we owned it and that increase seemed to price in a complete recovery and more. We sold in early January.”
6. Western Digital Corporation (NASDAQ:WDC)
Number of Hedge Fund Holders: 57
Percentage Loss in Share Price over Past Three Months: 5.71%
Western Digital Corporation (NASDAQ:WDC) markets data storage solutions. The company recently posted earnings for the first fiscal quarter, reporting earnings per share of $2.49, beating estimates by $0.05. The revenue over the period was $5 billion, beating predictions by $40 million. However, the guidance for the second quarter was below estimates on Wall Street, resulting in price target decreases by many investment advisors.
Western Digital Corporation (NASDAQ:WDC) has admitted that supply chain issues are causing problems for customers but the firm expects to sort these out soon. The firm has also started investing heavily in digital initiatives to offset some of these headwinds.
At the end of the second quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in Western Digital Corporation (NASDAQ:WDC), down from 58 in the preceding quarter worth $1.9 billion.
In addition to Activision Blizzard, Inc. (NASDAQ:ATVI), Peloton Interactive, Inc. (NASDAQ:PTON), and Biogen Inc. (NASDAQ:BIIB), Western Digital Corporation (NASDAQ:WDC) is one of the stocks that hedge funds are buying.
ClearBridge Investments, in its Q1 2021 investor letter, mentioned Western Digital Corporation (NASDAQ:WDC). Here is what the fund has to say in its letter:
“Our high active share approach made the most difference in IT, where the portfolio’s holdings gained 4.5% compared to a loss for the benchmark. Results were led by our more cyclical positions in digital storage provider Western Digital.”
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Disclosure. None. 11 Best Beaten Down Stocks To Buy Today is originally published on Insider Monkey.
