The S&P 500 Is at Record Levels but These 3 Stocks Are Still Near Their 52-Week Lows

The S&P 500 Is at Record Levels but These 3 Stocks Are Still Near Their 52-Week Lows

Are you worried that the stock market has gotten too hot to invest in? While the S&P 500 has been breaking records, that doesn’t mean you can’t find some good deals in the stock market these days.

Three stocks that are trading at cheap valuations are Starbucks (NASDAQ: SBUX), Nike (NYSE: NKE), and CVS Health (NYSE: CVS). Here’s why these stocks haven’t been doing well of late and why they could be good investments to add to your portfolio today.

1. Starbucks

The coffee shop giant suddenly has a crisis on its hands. Sales are dropping and concerns are mounting that customers are trading down to cheaper coffee options. When the company released its latest quarterly results on April 30, it reported that its consolidated net revenue for the first three months of the year was down 2% to $8.6 billion. And globally, comparable-store sales were down by 4%.

Starbucks’ expensive coffee for the most part has been fairly resilient amid inflation and more challenging economic conditions, but there finally appear to be cracks in consumer demand. While the average ticket was up by 2% last quarter, comparable transactions decreased by 6%.

Shares of Starbucks are down 18% this year. And in May, the stock hit a new 52-week low of $71.80. It has rallied since then but investors can still buy shares of the coffee company at a reduced price. At just 22 times earnings, Starbucks is cheaper than the average stock on the S&P 500, which trades at 23 times its trailing profits.

Provided you can be patient with the stock, Starbucks has the potential to be an underrated buy as the company still has a strong customer base and while sales aren’t great now, this could prove to be a temporary bump in the road for this solid business.

2. Nike

Another brand that is known for high-priced products is Nike. Its name-brand apparel doesn’t come cheap and for cash-strapped consumers, the prices may finally be too much to handle. The stock is trading just a few dollars away from its 52-week low of $88.66 as shares of Nike are down more than 15% this year.

In its most recent quarter, which ended on Feb. 29, Nike’s sales rose by just 1% year over year to $12.4 billion. Net income of just under $1.2 billion was down by 5%. But as with Starbucks, this may be a minor setback for Nike. According to Piper Sandler‘s most recent annual teen survey, Nike still ranks as the top brand with teens in both apparel and footwear categories.

Nike’s consumers may be spending less but there’s no reason to doubt the strength of the overall brand. At 27 times trailing earnings, Nike may still be a bit of an expensive stock to own but if you’re willing to hang on for the long term, it can make for a solid investment.

3. CVS Health

The worst-performing stock on this list is pharmacy retailer and healthcare giant CVS Health. It has lost close to one-third of its value this year as rising costs have been weighing on its operations.

The company’s top line has been growing but it has been the bottom line that has investors concerned of late. Revenue of $88.8 billion for the first three months of the year rose by nearly 4% year over year but due to rising healthcare costs, operating income of $2.3 billion was down by 34%. Investors are also worried that the near-term results may not be all that better as Medicare Advantage rates are going up by less than expected in 2025.

These are, however, short-term problems for the business. CVS has been expanding its operations over the years to become a bigger player in healthcare. Growing beyond just pharmacy retail, it’s now in the pharmacy benefits, health insurance, and home health businesses as well. And in the long run, that puts it in position to play a key role in the healthcare industry‘s overall growth.

Today, CVS Health’s stock trades within a few dollars of its 52-week low of $53.70. And at just 10 times its trailing earnings, it makes for a fairly cheap stock to load up on right now.

Should you invest $1,000 in Starbucks right now?

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike and Starbucks. The Motley Fool recommends CVS Health and recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.

The S&P 500 Is at Record Levels but These 3 Stocks Are Still Near Their 52-Week Lows was originally published by The Motley Fool

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