In this article, we will take a look at the 5 best depressed stocks to buy now. To see more such companies, go directly to 14 Best Depressed Stocks To Buy Now.
5. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Number of Hedge Fund Holders: 43
SolarEdge Technologies, Inc. (NASDAQ:SEDG) ranks 5th in our list of the best depressed stocks to buy now according to hedge funds. Last month SolarEdge Technologies, Inc. (NASDAQ:SEDG) fell to new lows after Bank of America downgraded the stock to Neutral from Buy with a $181 price target, down from $320. Bank of America’s Julien Dumoulin-Smith said SolarEdge Technologies, Inc. (NASDAQ:SEDG) is “caught in the perfect storm of sector headwinds.”
Answering a question during Q2 earnings call, SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s management talked about its expectations in 2024:
“What we see right now, especially in Q3 and Q4 is the fact that the US market that is correcting right now, which is usually characterized with high resi and higher margins, by the way, compared to other regions, is slowing down very much, which, of course, impact negatively the margin. And at the same time, Europe is growing. And the commercial side is also growing. And this is also something that takes us a little bit down because the portion of commercial compared to residential in our overall mix, at least in Q3, Q4 is higher than we anticipated or anticipate to see.
If you combine these, the expectation should be that, in 2024, where we believe that, first of all, Europe will come back to course much quicker than the United States and we will also see, of course, again, there an increase in residential. Plus the fact that the US market that contributes to margin very nicely is also going to go up within, I don’t know, two, three, four quarters, but this is still within 2024, yes, we do expect that 2024 margins should come back to levels that we’ve seen, at least in the last quarters. With that said, again, the major ace is going to be here batteries because we do see that battery prices continue to go down at least right now. And as we’ve mentioned before, batteries target gross margin should be around 25%.
So even if today or in some quarters it’s higher than this, I’m not sure that this will persist. So I would cautiously say that 2024 should be, of course, first of all, back in the model, by the way, which we also believe that this may be the case even this year as well for the next two quarters. And second is that, yes, there are some drivers that suggest that 2024 can be on the upside part of it rather than on the downside part of it.”
Read the complete earnings call transcript here.
4. Peloton Interactive, Inc. (NASDAQ:PTON)
Number of Hedge Fund Holders: 46
Amid changing macroeconomic situation and rising inflation Peloton Interactive, Inc. (NASDAQ:PTON) shares are under pressure as analysts believe the company’s business could keep taking a hit as discretionary spending falls. Macquarie recently downgraded Peloton Interactive, Inc. (NASDAQ:PTON) to a Neutral rating from Outperform. Macquarie’s analyst Paul Golding however said a turnaround could still happen but too much volatility around the company has made it difficult to project.
The analyst cut his price target on Peloton Interactive, Inc. (NASDAQ:PTON) to $7 from $10.
Here is what Merion Road Capital specifically said about Peloton Interactive, Inc. (NASDAQ:PTON) in its Q3 2022 investor letter:
“Peloton Interactive, Inc. (NASDAQ:PTON) is quite a different story. You may recall from my Q1 letter that I initiated a position in the stock given the potential for a new CEO to leverage the company’s passionate and engaged userbase. The investment had meaningful upside potential (multiples of the then trading price), but also presented real downside risk; as such, I kept our exposure to just a few percentage points of the portfolio. Fast forward six months and underlying trends like churn, engagement, and new users weakened dramatically. I sold our shares as the likelihood for the company to achieve financial success has become increasingly remote.”
3. Dollar General Corporation (NYSE:DG)
Number of Hedge Fund Holders: 57
Dollar General Corporation (NYSE:DG) shares were tanking fast earlier this month but Gordon Haskett’s Don Bilson sees this as an opportunity for Dollar General Corporation (NYSE:DG) and investors. The analyst said Dollar General Corporation (NYSE:DG) could see pressure from activist investors after the massive share price drop. The analyst said potential activists that could pile into Dollar General Corporation (NYSE:DG) include Trian and Starboard.
2. JD.com, Inc. (NASDAQ:JD)
Number of Hedge Fund Holders: 64
Chinese tech giant JD.com, Inc. (NASDAQ:JD) ranks 2nd in our list of best depressed stocks to buy now. JD.com, Inc. (NASDAQ:JD)’s second quarter EPS came in at $0.74, beating estimates by $0.06. Revenue in the quarter jumped 7.6% year over year to $39.7 billion, surpassing estimates by $1.21 billion.
Baron Emerging Markets Fund made the following comment about JD.com, Inc. (NASDAQ:JD) in its first quarter 2023 investor letter:
“JD.com, Inc. (NASDAQ:JD) is one of the three largest e-commerce platforms in China. Shares declined after the company reported a slowdown in fourth quarter sales and commented that deliberate culling of unprofitable SKUs would also be a drag on headline revenue growth in the first half of 2023. We believe the slowdown was driven by the peak in Chinese COVID lockdowns, which have since ended, and the elimination or reduction of unprofitable business is better for long-term margins and returns on capital. We remain investors.”
1. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 66
Bristol-Myers Squibb Company (NYSE:BMY) is one of the best depressed stocks to buy now. Bristol-Myers Squibb Company (NYSE:BMY) recently said that the number of drug candidates it advances in registrational trials is expected to double from six to 12 over the next 18 months.
As of the end of the second quarter of 2023, 66 hedge funds tracked by Insider Monkey had stakes in Bristol-Myers Squibb Company (NYSE:BMY). The biggest stakeholder of Bristol-Myers Squibb Company (NYSE:BMY) during this period was Richard S. Pzena’s Pzena Investment Management which owns a $277 million stake in the company.
RGA Investment Advisors made the following comment about Bristol-Myers Squibb Company (NYSE:BMY) in its Q3 2022 investor letter:
“Bristol-Myers Squibb Company (NYSE:BMY), which we referenced above, boasts a double digit free cash flow yield that gets divided roughly equally between repurchases, a dividend and M&A in what is the best environment for acquisitions perhaps ever. In 2019, BMY acquired Celgene, who had one of the better corporate development programs in the industry. We view this as a great outlet for us as generalists considering a company like BMY should truly thrive with the ability to acquire outstanding assets and science at depressed valuations. We touched on the Turning Point acquisition above and we expect the company to be increasingly active in the M&A landscape. Importantly, Celgene also came to BMY with a phenomenal CAR-T platform. CAR-T is a cell therapy that activates the body’s immune system to target cancers. This will be a key growth vector alongside M&A in overcoming the company’s patent cliff.”
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