In this article, we discuss 5 52-week low stocks with upside potential. If you want to read about some more 52-week low stocks with upside potential, go directly to 10 52-Week Low Stocks with Upside Potential.
5. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 72
52-Week Low as of May 23: $40.31
Real-Time Share Price as of May 23: $41.58
Intel Corporation (NASDAQ:INTC) makes and sells semiconductor products. The company has invested heavily in artificial intelligence products in recent months, becoming a leading source of solutions in the AI space. Last year, it launched Gaudi, an AI-powered NPU. This year, it has launched the Gaudi 2, a product that is 2-times faster than the competition. NVIDIA, a rival of Intel, recently claimed that AI represented a $1 trillion market opportunity for chip stocks in the long-term.
In late February, Raymond James analyst Chris Caso upgraded Intel Corporation (NASDAQ:INTC) stock to Market Perform from Underperform without a price target, noting that the path to the three year goals of the firm was “very long and expensive”.
At the end of the fourth quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $5.5 billion in Intel Corporation (NASDAQ:INTC), compared to 66 in the previous quarter worth $6.4 billion.
In its Q4 2021 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Intel Corporation (NASDAQ:INTC) was one of them. Here is what the fund said:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel Corporation (NASDAQ:INTC), Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
4. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 72
52-Week Low as of May 23: $179.22
Real-Time Share Price as of May 23: $183.54
Lowe’s Companies, Inc. (NYSE:LOW) operates as a home improvement retailer. The firm is increasing earnings per share despite a decline in sales, has improved operating margin over the past three months, and is a sustainable dividend player. The company also continues to generate value through large share buyback programs. Despite a cooling housing market in the US, the firm remains well positioned to expand margins, even with the inflation numbers factored into the equation.
On May 19, Jefferies analyst Jonathan Matuszewski maintained a Buy rating on Lowe’s Companies, Inc. (NYSE:LOW) stock and lowered the price target to $238 from $290, noting that the sales and margin guidance of the firm seemed “achievable”.
At the end of the fourth quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $6.8 billion in Lowe’s Companies, Inc. (NYSE:LOW), up from 60 in the preceding quarter worth $5 billion.
In its Q4 2021 investor letter, Pershing Square Capital Management, an asset management firm, highlighted a few stocks and Lowe’s Companies, Inc. (NYSE:LOW) was one of them. Here is what the fund said:
“Lowe’s Companies, Inc. (NYSE:LOW) is a high-quality business with significant long-term earnings growth potential
Supportive macroeconomic backdrop
-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog
-COVID-19 causing millennials to enter the housing market
Positioned to grow EPS largely independent of market conditions
-Idiosyncratic revenue opportunities driving share gains
-Self-help initiatives catalyzing operating margin expansion
-Buybacks representing ~8% of current market capitalization planned for 2022
Multi-year business transformation with substantial earnings upside
-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing-Potential to generate high-teens EPS growth over the next several years.
Lowe’s Companies, Inc. (NYSE:LOW) continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher prospective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.”
3. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 84
52-Week Low as of May 23: $32.96
Real-Time Share Price as of May 23: $35.15
Bank of America Corporation (NYSE:BAC) provides banking and financial products. The company has beaten market expectations on earnings consistently for the past eight quarters and remains in a position to take maximum advantage of rising interest rates. The decline in the share price of the firm has baffled analysts, with most attributing the selloff to concerns around a recession. However, the EPS growth estimates for the stock, despite recent uncertainty, continue to hover around 7.5% for the next five years.
On May 3, Oppenheimer analyst Chris Kotowski maintained an Outperform rating on Bank of America Corporation (NYSE:BAC) stock and lowered the price target to $50 from $52, noting that loan growth and rising interest rates were good for the banks even during a recession.
At the end of the fourth quarter of 2021, 84 hedge funds in the database of Insider Monkey held stakes worth $47 billion in Bank of America Corporation (NYSE:BAC), compared to 72 in the previous quarter worth $46 billion.
In its Q1 2022 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Bank of America Corporation (NYSE:BAC) was one of them. Here is what the fund said:
“There are many times when volatility and beta give false signals. Banks outperformed in the post-tech bubble bear market of the early 2000s. At the market peak prior to the financial crisis (when risk was the highest in those names!), Bank of America Corporation (NYSE:BAC) had a 0.9x beta (based on the trailing 5 years) suggesting its “risk” was below the market’s. Wrong! It massively underperformed in the financial crisis. Realized beta over the 5 years from the pre-crisis’ 2006 peak measured 2.3x.
A much better indicator of actual risk, both before and after the financial crisis, was the quality of the balance sheet and risk-taking appetite. Beta is backwards looking and non-stationary. Relying on it underestimated risk going into the financial crisis and overestimated coming out of it (its beta has continued to fall over the past decade).
We care greatly about risk. We spend a significant amount of time thinking about the risks to our investments. We measure risk as permanent impairment of capital, which means the prices and values don’t bounce back. Business fundamentals determine risk.”
2. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 94
52-Week Low as of May 23: $40.73
Real-Time Share Price as of May 23: $42.98
Wells Fargo & Company (NYSE:WFC) is a diversified financial services firm. The company posted earnings for the first quarter of 2022 on April 14, reporting earnings per share of $0.88, beating analyst estimates by $0.07. The revenue over the period was $17.5 billion, down nearly 2.6% year-on-year. The firm attributed credit losses during the time to “the economic impact of the COVID-19 pandemic on the loan portfolios, as well as a decrease in net charge-offs”. On April 25, the firm declared a quarterly dividend of $0.25 per share.
On April 18, Barclays analyst Jason Goldberg kept an Overweight rating on Wells Fargo & Company (NYSE:WFC) stock and raised the price target to $64 from $62, appreciating the net interest income and loan growth outlook of the firm for 2022.
At the end of the fourth quarter of 2021, 94 hedge funds in the database of Insider Monkey held stakes worth $6.11 billion in Wells Fargo & Company (NYSE:WFC), compared to 88 the preceding quarter worth $6.18 billion.
In its Q4 2021 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Wells Fargo & Company (NYSE:WFC) was one of them. Here is what the fund said:
“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.
Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund includes Wells Fargo & Company (NYSE:WFC).”
1. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 158
52-Week Low as of May 23: $2,127.46
Real-Time Share Price as of May 23: $2,197.48
Alphabet Inc. (NASDAQ:GOOG) is a diversified technology company. The firm recently announced that it would be doubling production plans for the Pixel smartphone devices, expanding Pixel Pass and subscription services in a bid to widen the customer base of the firm. The plans will help the company reduce traffic acquisition costs. In the next few years, the company could hit 100 million annual smartphone shipments, contributing to the revenue growth of the tech giant that owns and runs the most popular search engine worldwide.
On April 27, Guggenheim analyst Michael Morris kept a Buy rating on Alphabet Inc. (NASDAQ:GOOG) stock and lowered the price target to $3,000 from $3,350, noting that the firm was still viewed as a tech leader in the industry.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG), with 2.9 million shares worth more than $8.5 billion.
In its Q4 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet Inc. (NASDAQ:GOOG), performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following Alphabet Inc. (NASDAQ:GOOG) and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet Inc. (NASDAQ:GOOG) (Google) again with a margin of safety.”
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