In this article, we discuss 10 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 5 52-Week Low Stocks with Upside Potential.
United States (US) President Joe Biden recently admitted that the US economy had problems and warned of a haul before the government could bring soaring prices under control. High inflation and rising interest rates have increased concerns that the US economy might sink into a recession, with analysts at Goldman Sachs, Moody’s, and Deutsche Bank all warning of a looming slowdown. However, Biden appeared to play down that risk during a visit to Japan, affirming that “internal growth and strength” would overcome problems.
As many prominent stocks like Alphabet Inc. (NASDAQ:GOOG), Wells Fargo & Company (NYSE:WFC), and Lowe’s Companies, Inc. (NYSE:LOW) fall near their 52-week lows, there are signs that the prices may be bottoming out. Brian Deese, the director of the National Economic Council, recently told Fox News that the higher interest rates pointed to an economy in transition that was moving from record high growth rates to more stable and resilient growth. Deese urged the market to give the Federal Reserve more time to sort out the situation.
In mid-May, analysts at Goldman Sachs revised their growth forecasts for the second quarter to 2.5% annualized, blaming higher prices and continued supply chain disruptions as some of the main reasons behind the revision. In the first quarter, the economy has already contracted by around 1.4% amid a large trade imbalance and a reduction in inventory purchases. The gloomy outlook has led to a mass selloff at the market which has swept everyone in its wake, creating mouth-watering valuations in key sectors of the economy.
Our Methodology
The stocks that are trading near their 52-week lows but have upside potential were selected for the list. The business fundamentals and analyst ratings of these firms are also discussed to provide further context. Hedge fund sentiment was included as a classifier as well. Data from around 900 elite hedge funds tracked by Insider Monkey at the conclusion of Q4 2021 was used to quantify the hedge fund sentiment around each stock.
Photo by Austin Distel on Unsplash
52-Week Low Stocks with Upside Potential
10. Unilever PLC (NYSE:UL)
Number of Hedge Fund Holders: 23
52-Week Low as of May 23: $42.54
Real-Time Share Price as of May 23: $44.24
Unilever PLC (NYSE:UL) operates as a fast-moving consumer goods company. Even as inflation increases operating costs for most companies, Unilever remains well-positioned to weather the storm as it has pricing power in the personal products domain. The company navigated the first few weeks of the Russian war in Ukraine without too much damage to the overall business and has reaffirmed previous guidance for 2022 recently. Higher pricing will improve sales and nominal profits for the firm and also help reduce leverage.
On March 14, Bernstein analyst Bruno Monteyne upgraded Unilever PLC (NYSE:UL) stock to Market Perform from Underperform but lowered the price target to GBP 3,300 from GBP 3,500, citing valuation as one of the prime reasons behind the upgrade.
At the end of the fourth quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Unilever PLC (NYSE:UL), compared to 17 in the previous quarter worth $876 million.
Just like Alphabet Inc. (NASDAQ:GOOG), Wells Fargo & Company (NYSE:WFC), and Lowe’s Companies, Inc. (NYSE:LOW), Unilever PLC (NYSE:UL) is one of the stocks that elite investors are monitoring as a potential investment during a bear market.
In its Q4 2021 investor letter, Fundsmith LLP, an asset management firm, highlighted a few stocks and Unilever PLC (NYSE:UL) was one of them. Here is what the fund said:
“Unilever PLC (NYSE:UL) seems to be labouring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business. The most obvious manifestation of this is the public spat it has become embroiled in over the refusal to supply Ben & Jerry’s ice cream in the West Bank. However, we think there are far more ludicrous examples which illustrate the problem. A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot. The Hellmann’s brand has existed since 1913 so we would guess that by now consumers have figured out its purpose (spoiler alert — salads and sandwiches). Although Unilever PLC (NYSE:UL) had by far the worst performance of our consumer staples stocks during the pandemic we continue to hold the shares because we think that its strong brands and distribution will triumph in the end.”
9. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 55
52-Week Low as of May 23: $165.34
Real-Time Share Price as of May 23: $172.65
United Parcel Service, Inc. (NYSE:UPS) provides letter and package delivery services. In late April, the company posted earnings for the first quarter of 2022, reporting earnings per share of $3.05, beating estimates by $0.16. The revenue over the period was $24.4 billion, topping expectations by $600 million. The company also doubled its share repurchase program for 2022, taking the target to $2 billion for the full year. UPS has consistently maintained or increased its dividend each year since 1999 and recently declared a quarterly dividend of $1.52 per share.
On April 27, Oppenheimer analyst Scott Schneeberger maintained an Outperform rating on United Parcel Service, Inc. (NYSE:UPS) stock and lowered the price target to $217 from $249, noting the firm “continued to perform well despite numerous macro challenges”.
Among the hedge funds being tracked by Insider Monkey, New York-based Renaissance Technologies is a leading shareholder in United Parcel Service, Inc. (NYSE:UPS) as of Q1 2022, with 1.1 million shares worth more than $249 million.
In its Q4 2021 investor letter, Saturna Capital, an asset management firm, highlighted a few stocks and United Parcel Service, Inc. (NYSE:UPS) was one of them. Here is what the fund said:
“Given the likelihood of rising inflation and interest rates ahead, we anticipate adjustments to the portfolio to reduce exposure to highly valued stocks dependent on low interest rates to support terminal year valuations, while seeking investments in companies more correlated with a return to economic normalcy. Despite the share price decline, it remains expensive with modest growth. We sold our position in United Parcel. The United Parcel Service, Inc. (NYSE:UPS) sale was premature, and we may re-engage given an opportunity.”
8. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 57
52-Week Low as of May 23: $66.72
Real-Time Share Price as of May 23: $69.02
Oracle Corporation (NYSE:ORCL) provides information technology solutions to businesses. In the latest quarterly results, the company posted the highest level of organic revenue growth since it began a transition to the cloud. The firm is also in the final stages of the blockbuster purchase of health firm Cerner in a deal worth $28 billion. The company remains one of the most reliable earners in the software space and the decline in stock price is favorable compared to the freefall in the software sector overall.
On March 29, investment advisory Exane BNP Paribas upgraded Oracle Corporation (NYSE:ORCL) stock to Neutral from Underperform with a price target of $79. Analyst Stefan Slowinski issued the ratings update.
At the end of the fourth quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $4 billion in Oracle Corporation (NYSE:ORCL), up from 56 in the preceding quarter worth $3.4 billion.
Here is what ClearBridge Investments has to say about Oracle Corporation (NYSE:ORCL) in its Q3 2021 investor letter:
“While the information technology (IT) sector in the benchmark stalled amid rising rates, our holdings outperformed in relative terms, helped in part by a strong quarter from Oracle Corporation (NYSE:ORCL), the dominant provider of on-premise database software for large enterprises globally and an increasingly viable cloud competitor. Solid quarterly results, raised guidance, healthy underlying metrics and an attractive valuation contributed to strong performance during the period.”
7. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 57
52-Week Low as of May 23: $41.02
Real-Time Share Price as of May 23: $43.18
Cisco Systems, Inc. (NASDAQ:CSCO) makes and sells networking and other products. The firm has several advantages over peers in the marketplace, including a large customer network, the long-term demand for networking products, the leading share of the firm in the networking space, the backlog for products and services which is at an all-time high, as well as a solid dividend track record. Over the past five years, the company has generated over $40 billion in free cash flows, which represents nearly 19% of the market cap.
On May 19, Jefferies analyst George Notter maintained a Buy rating on Cisco Systems, Inc. (NASDAQ:CSCO) stock and lowered the price target to $52 from $65, noting that it was “a bit early for economic pressures to filter through to their business”.
At the end of the fourth quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $3.4 billion in Cisco Systems, Inc. (NASDAQ:CSCO), compared to 63 in the previous quarter worth $3.9 billion.
Here is what ClearBridge Investments has to say about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2021 investor letter:
“We reinvested a portion of the proceeds into existing holding Cisco Systems, Inc. (NASDAQ:CSCO), which also has highly valuable technology and an improving secular growth story with its leading position in core networking hardware, as well as in its growing software and services business. Cisco Systems, Inc. (NASDAQ:CSCO) has refocused on winning share in the large and growing hyperscale market and has been investing aggressively in R&D to support growth. We believe Cisco has found new legs after previously ceding some growth opportunities in cloud while maintaining its strong presence in the carrier and enterprise markets. Cisco Systems, Inc. (NASDAQ:CSCO) boasts a strong balance sheet and accelerating multiyear growth while trading at a modest multiple of earnings.”
6. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 63
52-Week Low as of May 23: $117.27
Real-Time Share Price as of May 23: $120.68
Walmart Inc. (NYSE:WMT) operates as a retail firm. The stock has lost value in the past few weeks after the company posted disappointing earnings for the first quarter of 2022 and did not announce a positive guidance update. However, despite recent underperformance, the company remains one of the best retail stocks on the market, especially in light of upcoming inflation, as it can withstand price pressures better than peers. The company is also tapping into alternative revenue streams like digital advertising to complement growth in the food business.
On May 18, BMO Capital analyst Kelly Bania maintained an Outperform rating on Walmart Inc. (NYSE:WMT) stock and lowered the price target to $165 from $170, underlining that the firm was a “highly attractive global retailer with difficult-to-replicate scale and strong price positioning”.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Walmart Inc. (NYSE:WMT), with 5 million shares worth more than $729 million.
Alongside Alphabet Inc. (NASDAQ:GOOG), Wells Fargo & Company (NYSE:WFC), and Lowe’s Companies, Inc. (NYSE:LOW), Walmart Inc. (NYSE:WMT) is one of the stocks on the radar of elite hedge funds amid rising market volatility.
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Disclosure. None. 10 52-Week Low Stocks with Upside Potential is originally published on Insider Monkey.
