When the stock market falls sharply, the stocks of many great companies often go on sale. That has happened in spades lately. The stock market, as measured by the S&P 500, was recently down about 21% from its 52-week high — while many stocks have seen their shares implode by 50%, 75%, and perhaps even more.
Here are three companies in which you might want to invest, now that their stocks are at much lower levels than they have been in quite a while.
Nike (NKE 6.63%) is “the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities.” That’s no surprise to most of us. You might be surprised to learn that the venerable Converse brand is now part of Nike, though.
Nike is facing competition from companies such as Adidas and New Balance, and is challenged by supply chain issues, as are many other businesses. And sales in a key market, China, are pressured due to pandemic lockdowns. But Nike still has an extremely valuable brand — ranked 10th in the world with an estimated value of $41 billion, per the folks at Interbrand.
Investors balked at Nike’s first-quarter report, which revealed inventory piling up. But the report was not a total bust, with both revenue and earnings exceeding analyst expectations. Nike’s shares have slumped some 47% from their 52-week high, and with a recent price-to-earnings (P/E) ratio of 27, considerably less than the five-year average of 47, the stock is more attractively priced than it was months ago.
till, that’s not a bargain-basement price, so if you believe in Nike’s growth potential, you might buy into it incrementally over time, hoping for some lower entry points. Or you might just add it to your watch list, waiting for a more enticing time to “just do it” and buy.
Comcast (CMCSA 3.81%) has grown into a massive media and technology company — focused primarily on connectivity, aggregation, and streaming and with a recent market value topping $135 billion. You may not realize it, but its businesses and brands include Xfinity, Comcast Business, Sky, Universal Filmed Entertainment Group, Universal Studio Group, Sky Studios, the NBC and Telemundo broadcast networks, multiple cable networks, Peacock, NBCUniversal News Group, NBC Sports, Sky News, and Sky Sports — not to mention Universal Parks and Resorts.
Comcast’s recently reported third quarter featured a 1.5% drop in revenue year over year. But free cash flow grew by 4.7%, while adjusted net income rose 4.5% and net cash from operating activities jumped 13.9%. The company is investing in growing its Peacock streaming service, and its theme parks have been doing well.
Some worry about slowing growth in broadband and people continuing to cut the cable in favor of streaming services, but others see opportunity if Comcast sheds some businesses and invests in faster-growing ones, such as wireless and theme parks.
Comcast’s stock was recently down 42% from its 52-week high, which pushed its forward-looking P/E ratio down to 8.2 from its five-year average of 14.5. And as always happens, when a stock price falls, a dividend yield rises — and Comcast stock was recently yielding a solid 3.5%.
Alphabet (GOOG 2.72%) (GOOGL 2.63%) is a widely admired powerhouse, with a recent market value topping $1.1 trillion and a brand ranked No. 4 in the world (by Interbrand) and valued at nearly $252 billion. That hasn’t been enough to keep its stock afloat in these volatile days, though. Alphabet’s shares were recently down almost 42% from their 52-week high, presenting an attractive entry point.
Remember that Alphabet is much more than just the dominant Google search engine. Its universe includes the very widely used Android mobile operating system, along with YouTube, and Google Cloud. YouTube alone is a very valuable property, with users reportedly watching more than a billion hours of content daily and YouTube advertising recently delivering 10% of total revenue. Alphabet also owns the Google Play app store, smart thermostat maker Nest, and Fitbit, among other things. Google advertising still generates most of its revenue, though — fully 79% in its third quarter of 2022.
CEO Sundar Pichai recently noted: “We’re sharpening our focus on a clear set of product and business priorities. Product announcements we’ve made in just the past month alone have shown that very clearly, including significant improvements to both Search and Cloud, powered by AI, and new ways to monetize YouTube Shorts.” CFO Ruth Porat noted, “We’re working to realign resources to fuel our highest growth priorities.”
There are plenty of other exciting growth stocks to consider for your long-term portfolio, and this is a great time to hunt for them, when they’ve fallen to more attractive levels.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Selena Maranjian has positions in Alphabet (A shares) and Alphabet (C shares). The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), and Nike. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.