11 Best Falling Stocks To Buy Now

In this article, we talk about 11 best falling stocks to buy now.

After a brutal 2022 which saw the S&P500 shed more than 21% in the first half of the year, Q2 earnings are coming in, and they’re not as bad as we’d think. Despite sky-high inflation, supply chain issues, labor shortages, and a strong US dollar which is affecting the overseas earnings of American conglomerates, many prominent companies beat estimates and issued positive guidance. Of the 56% of S&P500 companies that had issued their quarterly earnings reports by July 29, 73% of them outperformed earnings per share (EPS) estimates. This puzzled many investors who were bracing for a full-blown recession, and led to a nearly 7% rally for the S&P500 in the last one month as of August 9.

Another crucial tailwind for the bruised economy came in the form of employment figures for the month of July, which showed 528,000 jobs added during the month, well above the average of 388,000 jobs gained during the previous four months. The employment rate slid to 3.5%, the lowest figure since 1969 and equal to the pre-pandemic rate of February 2020. The leisure and hospitality industry led the way with 96,000 jobs added, whilst employment in professional services, healthcare, construction, manufacturing, and mining also picked up. Now, many feel that a recession is farther off than previously expected, and investors are continuously on the lookout for strong performers within a uniquely uncertain macro environment.

In the following list, we unpack 11 falling stocks that offer investors sound investment opportunities in the medium-to-long term. These include names like AT&T Inc., The Walt Disney Company (NYSE:DIS), and Meta Platforms, Inc. (NASDAQ:FB), along with others mentioned below.

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Our Methodology

Best Falling Stocks To Buy Now

11. DoorDash, Inc. (NYSE:DASH)

Number of Hedge Fund Holders: 52

Year-to-Date Share Price Decline (as of August 9): 50.06%

First up is food delivery platform DoorDash, Inc. (NYSE:DASH), which has suffered a downfall of more than 50% in the year to date, as the pandemic-driven boom in online food orders subsided and investors flocked towards safe haven stocks amid the ongoing market volatility.

But food delivery is a secular growth story, and DoorDash, Inc. continues to command the majority market share of the industry in the United States, which more than doubled in value during the pandemic. DoorDash recently announced its Q2 results, and reported order growth of 23.5% in comparison to the same period over last year, and posted a record number of daily active users and DashPass members despite the ongoing macro headwinds. EPS beat expectations by $0.11, whilst revenue of $1.61 billion also beat analysts’ estimates by $86.54 million.

Needham analyst Bernie McTernan on August 5 kept a ‘Buy’ rating on DoorDash, Inc. shares and raised the price target to $115 from $100. The analyst observed that the stock offers a compelling growth opportunity using its market share lead in restaurant to improve density. McTernan also noted that the company’s paid membership feature called DashPass should help it navigate the current market climate as it offers a good value proposition to customers.

As of the end of the first quarter of 2022, 52 out of the 912 hedge funds tracked by Insider Monkey held positions in DoorDash, Inc., with a collective price tag of $4.49 billion. The same number of hedge funds were bullish on DASH shares a quarter earlier as well. The company’s largest Q1 shareholder was Tiger Global Management LLC, with a nearly $961 million position.

Stocks such as AT&T Inc., The Walt Disney Company, and Meta Platforms, Inc., in addition to DoorDash, Inc., are some of the best beaten-down stocks to buy now for long-term gains.

10. Snap Inc. (NYSE:SNAP)

Number of Hedge Fund Holders: 54

Year-to-Date Share Price Decline (as of August 9): 77.66%

Snap Inc. (NYSE:SNAP) has had a terrible 2022, with growing competition, Apple’s privacy law changes, and slowing ad revenue amidst a weak macro backdrop leading to substantial losses for the firm. Its EPS for Q2 2022 was reported $0.01 above estimates, whilst revenue of $1.11 billion missed analysts’ estimates by $23.58 million.

Regardless, long-term investors can buy into Snap Inc. at an attractive valuation, with the stock down almost 78% since the start of the year as of August 9. Citi analyst Ronald Josey on July 22 reiterated a ‘Buy’ rating on the company shares, and revised the price target to $16 from $29. Notwithstanding the challenges of operating within the current environment, the analyst is encouraged by growth in the firm’s daily active users and engagement figures during the second quarter, and expects revenue growth to rebound in 2023 as the company remodels its cost structure.

A total of 54 hedge funds were long Snap Inc. at the end of the first quarter of 2022, with aggregate positions worth $2.7 billion. Its largest shareholder in Q1 2022 was Lone Pine Capital, with a $664 million position.

Baron Funds, an investment management firm, discussed the prospects of Snap Inc. in its Q4 2021 investor letter, stating:

“Snap Inc. is the leading social network among teens and young adults in North America and a growing number of overseas markets, including Western Europe and India. Shares fell this quarter on a greater-than anticipated impact from Apple’s new privacy changes for iOS mobile devices. These changes made it more difficult for Snapchat to measure the effectiveness of ads shown on its platform. We believe this is a near-term, industry-wide issue for which Snap is already developing a solution. Longer term, we continue to view Snap favorably as the company sustains its rapid pace of product innovation and expands its premium partnerships with advertisers.”

9. Airbnb, Inc. (NASDAQ:ABNB)

Number of Hedge Fund Holders: 66

Year-to-Date Share Price Decline (as of August 9): 34.45%

Airbnb, Inc. (NASDAQ:ABNB) operates an online platform which connects homeowners with travelers looking for short-term rental accommodation. Despite analysts’ expectations of low travel demand amid recession fears, and the stock being down 34.45% since the start of the year, Airbnb, Inc. recently posted positive Q2 earnings. Quarterly revenue recorded 58% year-on-year growth to come in at $2.1 billion. EPS of $0.73 also exceeded analysts’ forecasts by $0.21. Buoyed by its strong financial performance, the company also announced a $2 billion share repurchase program. 

Baird analyst Colin Sebastian in early August lowered the firm’s price target on Airbnb, Inc. to $140 from $155 and reiterated an ‘Outperform’ rating on the shares. He sees some difficulties in the near-term given tough year-over-year comparisons and guidance that is slightly below elevated Street expectations. However, the analyst remains bullish in the long term, with opportunities for further margin expansion and ongoing market share gains amid very large total addressable markets (TAMs).

A detailed review of the 900+ hedge funds in the Q1 database of Insider Monkey disclosed 66 hedge funds with combined stakes worth $3.69 billion in Airbnb, Inc.. This is up from 63 hedge funds with $2.97 billion in aggregate positions a quarter earlier. Jim Simons’ Renaissance Technologies was the most prominent Q1 shareholder of Airbnb, Inc., with a stake worth more than $584 million.

Here is what ClearBridge Investments had to say whilst discussing the prospects of Airbnb, Inc. in its Q2 2022 investor letter:

“Airbnb is the leading online platform for alternative accommodations globally. We believe the company is well-positioned to capitalize on the large and growing market for travel and experiences, with the potential for growth in e-travel to be higher post pandemic due to pent-up demand and increased work from anywhere flexibility. Airbnb is highly profitable today, though we see room for further margin expansion ahead. Furthermore, secular underpinnings to growth, a more variable cost structure and strong balance sheet should help the company drive better through-cycle performance as compared to its consumer discretionary peers.”

Abbott Laboratories (NYSE:ABT) is a global pharmaceutical giant which deals in the provision of healthcare products and medical devices. As one of the world’s largest providers of diabetes care products and Covid testing kits, along with a range of blockbuster drugs that generate more than $1 billion in revenue per annum, Abbott Laboratories is a compelling long-term buy, especially considering that the shares are currently down 22% in the year to date as of August 9.

On July 21, RBC Capital analyst Shagun Singh kept an ‘Outperform’ rating on Abbott Laboratories shares and decreased the price target to $132 from $143. The company posted solid Q2 results with Covid testing sales outpacing estimates by $1 billion, according to the analyst. Singh attributes the post-earnings stock price decline to the worsening macro pressures and the impact of staffing shortages and Chinese Covid lockdowns on the pace of medical device utilization.

AT&T Inc. is a telecommunications giant headquartered in Texas. The company shares have registered a decline of 5.6% since the start of 2022 and 12.22% in the last month alone, as of August 9. Hedge fund sentiment around AT&T Inc. was positive at the end of the first quarter of 2022, where 74 hedge funds were bullish on the company shares. In contrast, 70 hedge funds held stakes in the firm a quarter earlier.

With a market cap of roughly $129 billion and a dominant position in the wireless mobile services industry, AT&T Inc.  is one of the best falling stocks to own for investors with a long-term investment horizon. Furthermore, a P/E (price to earnings) ratio of 6.68 also means AT&T Inc. is currently trading below its intrinsic market value.

Morgan Stanley analyst Simon Flannery observed on July 22 that the recent sell-off in AT&T Inc. shares is an “over-reaction,” and maintained an ‘Overweight’ rating with a $22 price target. Deutsche Bank analyst Bryan Kraft kept a ‘Buy’ rating on AT&T shares with a $22 price target, down from $24. He noted that the company’s latest quarterly results showed strong execution in wireless customers and average revenue per user growth, combined with a weaker performance in Business Wireline and free cash flow conversion as macroeconomic headwinds start to have an impact.

In its investor letter for the fourth quarter of 2021, here is what asset management firm Weitz Investment Management had to say about AT&T Inc.:

“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T Inc. to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”

6. Intel Corporation (NASDAQ:INTC)

Number of Hedge Fund Holders: 76

Year-to-Date Share Price Decline (as of August 9): 34.28%

Intel Corporation (NASDAQ:INTC) is an American IT giant which deals in the production of semiconductor chips and computer hardware. It reported below-par Q2 earnings, with EPS missing estimates by $0.41 and revenue coming in at $15.32 billion, below estimates by $2.60 billion. Shares are down 34.3% in the year to date, and have slumped 6.16% in the last month alone as of August 9.

However, the long-term bullish view on Intel Corporation is warranted by the fact that it stands as one of the biggest beneficiaries of President Biden’s CHIPS Act, which is the US government’s attempts to boost the local semiconductor industry, and would allow Intel to build manufacturing plants at subsidized rates through an investment tax credit. A $20 billion semiconductor manufacturing plant in Ohio is already under discussion, and Reuters recently reported that a $5 billion set up in Italy is also nearing approval. This is part of Intel’s long-term strategy under CEO Pat Gelsinger to turnaround the company’s fortunes after it had lost significant market share to rival Advanced Micro Devices (NASDAQ:AMD) in recent years.

Out of all the hedge funds tracked by Insider Monkey, 76 reported bullish bets on Intel Corporation shares at the end of Q1 2022, showing a positive trend from the preceding quarter where 72 hedge funds held positions in the company.

On August 1, Northland analyst Gus Richard kept an ‘Outperform’ rating and a $55 price target on Intel Corporation shares. The analyst assessed that Intel Corporation’s (NASDAQ:INTC) valuation is now less than AMD, and he believes that Intel’s manufacturing capability is strategically valuable to the U.S. Department of Defense and will “persevere in one form or another.” If INTC “continues to stumble,” Richard estimates the breakup value to be $235 billion or $57 per share, and thus sees “little downside risk and a lot of upside,” even if the company does not execute, given this breakup value and de-risked estimates, robust valuation support, and a 4% dividend yield.

Intel Corporation is a prominent stock on the radar of investors placing long-term bets, in addition to stocks such as AT&T Inc., The Walt Disney Company, and Meta Platforms, Inc..

Here is what Baron Fund, an investment management firm, had to say about Intel Corporation in its Q1 2022 investor letter:

“Intel’s capital spending process is guided by a process they appropriately named “copy exactly.” This means that they attempt to “copy exactly” what they have already built and attempt to improve tried and true processes iteratively.”

5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 81

Year-to-Date Share Price Decline (as of August 9): 31.72%

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest semiconductor foundry, producing chips for clients including Apple, NVIDIA, and AMD, among others. Shares have fallen more than 31% in the year to date as of August 9, as lockdown disruptions, supply chain issues, and the looming threat of the Chinese invasion of Taiwan put TSM stock under pressure.

But given the firm’s crucial and dominant role in powering the global tech industry, Taiwan Semiconductor Manufacturing Company Limited stands as a recession-proof stock that offers long-term security.

On August 3, Northland analyst Gus Richard reiterated an ‘Outperform’ rating on Taiwan Semiconductor Manufacturing Company Limited shares and increased the price target to $105 from $95. The analyst thinks that lead times for wafers out of the company will limit upside over the remainder of 2022, but server market share momentum will accelerate heading into 2023. The analyst also contends that rival Intel cannot catch up with Taiwan Semiconductor Manufacturing Company Limited in terms of server CPU leadership until 2024.

For Q2 2022, Taiwan Semiconductor Manufacturing Company Limited posted $17.83 billion in revenue, growing 33.9% from the year-ago quarter and beating estimates by $327.19 million. EPS of $1.55 also came in above analysts’ forecasts by $0.05. 

Hedge funds increased their exposure to Taiwan Semiconductor Manufacturing Company Limited during the first quarter of 2022. 81 hedge funds were long TSM at the end of March, as compared to 72 hedge funds at the close of December.

Here is what ClearBridge Investments had to say about Taiwan Semiconductor Manufacturing Company Limited in its Q2 2022 investor letter:

“Disciplined selling is a key component of our risk-based approach, especially among companies with cyclical growth drivers. We have seen good success over the last several years from our semiconductor exposure but have been taking profits in companies such as, this quarter in Taiwan Semiconductor (NYSE:TSM) to reduce overall industry exposure. Given the exceptional sets of circumstances of semi shortages, double ordering and good growth in end market products including personal electronics and even data centers, we believe a neutral market position to this industry within the tech sector is appropriate.”

3. JPMorgan Chase & Co. (NYSE:JPM)

Number of Hedge Fund Holders: 110

Year-to-Date Share Price Decline (as of August 9): 28.66%

JPMorgan Chase & Co. is the largest bank in the United States, offering a range of financial services such as investment banking, retail banking, wealth management and asset management. JPM shares are currently trading at a P/E (price to earnings) ratio of 9.24, and have shed 28.7% in value since the start of 2022, presenting an excellent buying opportunity for investors.

On July 18, Berenberg analyst Peter Richardson upgraded JPMorgan Chase & Co. to ‘Hold’ from ‘Sell’ with an unchanged price target of $120. Richardson sees JPM shares trading at a 20% discount to their long-run average, and given the temporary nature of the headwinds, the analyst sees downside risks to the bank’s share price as quite limited.

2. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 113

Year-to-Date Share Price Decline (as of August 9): 31.42%

Walt Disney Company is a global media and entertainment conglomerate with interests in theme parks, studio films, and digital streaming through its Disney+ platform. The Q1 database of Insider Monkey shows 113 hedge funds with long bets on the company shares, with a collective price tag of $5.16 billion.

On July 26, Truist analyst Matthew Thornton lowered the firm’s price target on The Walt Disney Company to $125 from $135 and maintained a ‘Buy’ rating on the company shares. The analyst sees Disney’s 2024 target of 230-260 million subscribers as hard to achieve given the loss of IPL cricket streaming rights, but he thinks a figure around 206 million is achievable. The analyst is bullish on the opportunity to bolster gross adds, retention, and average revenue per user. Disney’s theme parks business could also recover to higher revenue and profitability, observed Thornton in his thesis.

Despite shares being down 31.42% in the year to date, Walt Disney Company is a an attractive option for investors with a view for long-term gains. Popular hedge funds held major stakes in the company during the first quarter, and its largest shareholder at the end of March was Matrix Capital Management, which held 6.33 million shares worth roughly $868 million.

Oakmark Fund, an investment firm, shared a bullish outlook on The Walt Disney Company as part of its Q2 2022 investor letter. Here’s what they said:

“Disney is one of the most beloved consumer companies in the world. Its media business has a rich library of intellectual property, which provides a powerful engine for creating new content across the Disney, Pixar, Marvel, and Star Wars brands. This content also contributes to the success of Disney’s theme parks, which generated nearly half the company’s earnings and grew more than 10% annually in the decade prior to the pandemic. Shares have fallen nearly 50% over the past year as investors worried about the company’s ability to transition its media business to a direct-to-consumer streaming world. This transition has required management to make investments in its Disney+ streaming service that are depressing profitability today. However, we believe these investments will ultimately produce attractive returns as Disney+ continues to grow subscribers and increase pricing over time. As a result, we were able to purchase shares at a substantial discount to our estimate of intrinsic value.”

1. Meta Platforms, Inc. (NASDAQ:FB)

Number of Hedge Fund Holders: 200

Year-to-Date Share Price Decline (as of August 9): 49.71%

Meta Platforms, Inc. has slid almost 50% since the start of 2022, as increasing competition from Tiktok, Apple’s recent privacy law changes, and a cool down of online activity back to pre-pandemic levels has affected the stock. Still, Facebook, Instagram and WhatsApp remain among the most downloaded and used platforms around the world, and with recent strategic investments into the ‘Metaverse’, Meta Platforms, Inc. is poised to remain one of the most dominant names in the internet/tech space, offering investors the guarantee of long-term gains.

On July 28, JMP Securities analyst Andrew Boone lowered the firm’s price target on Meta Platforms, Inc. to $215 from $240, and maintained an ‘Outperform’ rating on the company shares. The analyst sees Q2 results and guidance reflecting the challenging macro environment which is weighing on advertiser sentiment, but sees META as a “must-buy” stock given nearly 3 billion daily active users on the platform. The company shares are trading at 14x estimated 2023 GAAP earnings, according to Boone, who sees a positive risk/reward for investors at current levels.

For the second quarter, Meta Platforms, Inc. posted earnings per share which came in $0.09 below analysts’ predictions. Revenue of $28.82 billion was recorded $129.65 million below estimates, and represented the first year-over-year quarterly revenue drop in the firm’s history, sliding 0.88% from the period last year. Despite the recent hiccups, Q2 revenue showed a significant jump of 70% from the second quarter of 2019.

A total of 200 hedge funds from our Q1 database disclosed ownership of stakes in Meta Platforms, Inc. with a combined value of $19.33 billion. This is down from 224 hedge funds with bullish bets a quarter earlier.

Boyar Value Group, an asset management firm, talked about a few stocks in its Q4 2021 investor letter, and Meta Platforms, Inc. (NASDAQ:META) was one of them. Here is what the fund said:

“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms, Inc. (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”

You can also take a look at 15 Best Semiconductor Stocks to Buy Now and 10 Best Dividend Stocks for Passive Income.

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