In this article, we will discuss the 10 Most Oversold S&P 500 Stocks in 2024.
Strong economic growth and the prospect of declining interest rates continue to support gains in global equities. That being said, elevated valuations over the past 2 years, mainly in the US, have put global stocks in a vulnerable position, opines Goldman Sachs Research. By the close of last year, the S&P 500 saw one of its strongest 2-year periods of returns since the year 1928. Much of this increase demonstrates better fundamental growth than investors had expected, with higher valuations acting as a significant contributor.
Diversification Remains the Key, Says Morgan Stanley
As per Morgan Stanley, while several investors continue to favour recently successful approaches, like passive exposure to the broader S&P 500 Index, a more diversified investment strategy might provide better risk-adjusted returns. The benchmark US equity index remains richly priced and excessively concentrated. The 10 biggest stocks in the S&P 500 index make up for ~40% of its total market capitalization, making it excessively dependent on certain mega-cap tech companies continuing to exceed ambitious performance forecasts.
With the S&P 500 anticipated to post a marginal 7% return in 2025, other regions, sectors, and asset classes might become more attractive, says Morgan Stanley. Generally, the stocks and bonds have an inverse relation, offering a natural hedge in diversified portfolios. However, the current trends have demonstrated that such assets are moving in tandem, with both witnessing losses simultaneously, as was seen in 2022. Morgan Stanley believes that the higher bond yields and lower bond prices have been coinciding with lower stock prices. This trend highlights the importance of diversifying beyond traditional asset classes to mitigate risks.
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What Lies Ahead for the S&P 500?
While there are expectations of equity markets making further progress over the year as a whole — largely fueled by earnings — they have become vulnerable to a correction either due to higher bond yields and/or disappointments on growth in economic data or earnings, says Goldman Sachs. A fall in interest rates has been related to robust equity returns. In the US, the US Fed’s rate-cutting cycles have often coincided with higher stock prices as long as the broader economy avoids recession.
Amidst a favorable backdrop, Goldman believes that 3 main factors complicate the outlook for the stock rally. First, the pace of recent gains reflects much of the optimism the analysts expect regarding economic growth. Second, elevated valuations might limit the forward returns. Finally, the third factor is the unusually high market concentration. As per Peter Oppenheimer, chief global equity strategist and head of Macro Research in Europe, equities tend to be more vulnerable to growth disappointments due to increased concentration of equity market returns.
Therefore, investors are required to focus on companies trading at reasonable valuations, and that have strong fundamentals. Amidst such trends, let us now have a look at the 10 Most Oversold S&P 500 Stocks in 2024.
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Our Methodology
To list the 10 Most Oversold S&P 500 Stocks in 2024, we used a screener and filtered out the stocks present in the S&P 500 Index. Next, we shortlisted the ones that have declined significantly over the past year. Finally, we mentioned the hedge fund sentiment around each stock, as of Q3 2024. The stocks are arranged in ascending order of their hedge fund sentiments.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Most Oversold S&P 500 Stocks in 2024
10) Celanese Corporation (NYSE:CE)
% Decline In 1 Year: ~54.0%
Number of Hedge Fund Holders: 15
Celanese Corporation (NYSE:CE) is a chemical and specialty materials company, which is engaged in manufacturing and selling high-performance engineered polymers. The automotive and industrial markets, end-markets critical for the company, witnessed a significant slowdown. Furthermore, there have been concerns regarding prolonged softness in demand, which can result in further production curtailments and inventory build-up, weighing over profit margins. Notably, Celanese Corporation (NYSE:CE)’s stock has seen a decline of ~54% over the past year.
However, the M&M acquisition can act as a growth catalyst for the company over the long term. The expansion in product portfolio and market presence enhanced with the help of this acquisition place Celanese Corporation (NYSE:CE) well as a more comprehensive solutions provider in high-growth end markets. The company remains focused on driving continued improvement in earnings and cash generation via strategic actions.
These actions include implementing additional cost reduction programs anticipated to realize incremental savings of over $75 million by 2025 end. The focus of the programs will be on fueling productivity in SG&A costs. Also, Celanese Corporation (NYSE:CE) continues to focus on efficiently and stringently deploying capital. The company has been emphasizing earnings growth, cost reductions, FCF expansion, and deleveraging to remain well-placed for long-term shareholder value creation.
9) Skyworks Solutions, Inc. (NASDAQ:SWKS)
% Decline In 1 Year: ~37.7%
Number of Hedge Fund Holders: 31
Skyworks Solutions, Inc. (NASDAQ:SWKS) is engaged in designing, developing, manufacturing, and marketing proprietary semiconductor products. The company’s stock has faced recent hurdles as a result of declining demand from its automotive and industrial clients. This is mainly because of slower EV sales and surplus inventories being managed by customers. However, Skyworks Solutions, Inc. (NASDAQ:SWKS) seems to be gaining the lost strength as it kicked off the new fiscal year with solid results, growing revenue 4% sequentially and surpassing the midpoint of its guidance. In Q1 2025, its revenues came in at $1.068 billion. On a GAAP basis, operating income was $181 million with diluted EPS of $1.00.
Skyworks Solutions, Inc. (NASDAQ:SWKS) has seen consistent improvement in demand indicators within Broad Markets, while it has successfully supported several new product launches in Mobile. Notably, it has secured 5G content for premium Android smartphones for Samsung Galaxy, Xiaomi, and Asus. Skyworks Solutions, Inc. (NASDAQ:SWKS) has expanded its design win pipeline in automotive with cellular connectivity and power management solutions.
Fitch Ratings has highlighted that Skyworks Solutions, Inc. (NASDAQ:SWKS) is diversifying its long-term revenue with the growth of connectivity solutions in a wide range of applications apart from smartphones. These consist of data centers, IoT, industrial, and automotive applications.
8) Constellation Brands, Inc. (NYSE:STZ)
% Decline In 1 Year: ~33.4%
Number of Hedge Fund Holders: 36
Constellation Brands, Inc. (NYSE:STZ) is engaged in producing, importing, marketing, and selling beer, wine, and spirits. The company’s stock has seen the impact of the slowing beer market. Furthermore, there are concerns related to the potential changes in immigration policies which can impact labor availability and costs in the broader agriculture sector, potentially weighing over its supply chain and production costs. Despite these challenges, Morgan Stanley analyst Dara Mohsenian maintained a “Buy” rating on Constellation Brands, Inc. (NYSE:STZ)’s stock, setting a price target of $280.00.
This Buy rating stems from a combination of factors such as its operations and market position which offer long-term value. As per the analyst, Constellation Brands, Inc. (NYSE:STZ) remains proactive in its capital allocation strategy, enhanced by its stock repurchase activities, which can improve shareholder value. Such strategic moves, together with its strong brand portfolio, support the optimistic view. As per Constellation Brands, Inc. (NYSE:STZ)’s EVP and CFO, the company’s strong YTD cash flow generation in fiscal 2025 enabled the company to return more than $1.2 billion to shareholders in dividends and share repurchases, and to continue advancing brewery investments in a disciplined and agile manner.
Furthermore, Constellation Brands, Inc. (NYSE:STZ)’s efforts to optimize production and distribution networks can result in further efficiency gains and cost savings. Coho Partners, an investment management company released its Q2 2024 investor letter. Here is what the fund said:
“We also eliminated Conagra (CAG) in favor of a better risk/return for Constellation Brands, Inc. (NYSE:STZ). We are encouraged by the Constellation Board’s decision to eliminate the dual voting share class and reprioritize capital allocation away from acquisitions and towards returns to shareholders. With capital spending expected to decline and leverage near the company’s target, more cash flow should be available for shareholders. STZ is now focused on the higher growth and the higher margin premium beer category, which they dominate with Corona Extra, Modelo Especial and Pacifico. Additionally, the Wine and Spirits business, which has been disappointing is no longer a meaningful part of STZ’s business as it now accounts for less than 10% of overall earnings. We expect STZ to deliver low double-digit growth in both earnings and dividends for many years to come, which is consistent with the Board’s recent approval of a 13.5% dividend hike.”
7) Microchip Technology Incorporated (NASDAQ:MCHP)
% Decline In 1 Year: ~30.9%
Number of Hedge Fund Holders: 37
Microchip Technology Incorporated (NASDAQ:MCHP) is engaged in the development, manufacture, and sale of smart, connected, and secure embedded control solutions. The company’s stock has witnessed a decline as a result of unfavourable revenue impacts due to severe inventory correction, which continued in most end markets. Furthermore, Microchip Technology Incorporated (NASDAQ:MCHP)’s stock has seen the brunt of a challenging period for the broader semiconductor industry, which witnessed headwinds due to supply chain disruptions and a shift in demand patterns.
Despite the near-term challenges, the company appears to be well-placed to benefit from several growth levers. Microchip Technology Incorporated (NASDAQ:MCHP)’s technology is well-placed in automotive and industrial markets, with positive trends likely to drive growth. The company’s strong position in microcontroller units (MCUs), field-programmable gate arrays (FPGAs), and analog products remains well in demand in such markets. The automotive industry continues to see a significant transition transformation with the rise of EVs and advanced driver assistance systems (ADAS).
Notably, such trends need increasingly sophisticated semiconductor solutions, offering a significant growth opportunity for Microchip Technology Incorporated (NASDAQ:MCHP). Madison Investments, an investment advisor, released its Q4 2024 investor letter. Here is what the fund said:
“We didn’t make any new investments in the quarter, but added to two holdings: Microchip Technology Incorporated (NASDAQ:MCHP) and CDW. Microchip has been working through channel inventory adjustments and weak end market demand. Recently, the company’s Chairman (and previously long-time CEO) Steve Sanghi returned to the CEO role and has embarked on a plan to revitalize operations. New design activity and product releases have been strong across the portfolio, implying that the core innovation engine remains strong. Thus, we have full confidence that Steve need only to tweak some operational processes to re-position the company for success.”
6) ON Semiconductor Corporation (NASDAQ:ON)
% Decline In 1 Year: ~36.5%
Number of Hedge Fund Holders: 45
ON Semiconductor Corporation (NASDAQ:ON) offers intelligent sensing and power solutions in the US and internationally. The company’s stock has been subject to softness in demand trends and inventory adjustments by the customers. During H1 2024, the dependency of revenue on automotive products, and lower industrial revenue (because of lower industrial activity and inventory buildup) further contributed to the decline in stock price. However, ON Semiconductor Corporation (NASDAQ:ON) remains focused on maintaining its financial discipline, streamlining its operations, and continuing to deliver high-value, differentiated intelligent power and sensing solutions.
The company has announced that it has completed its acquisition of the Silicon Carbide Junction Field-Effect Transistor (SiC JFET) technology business, including the United Silicon Carbide subsidiary, from Qorvo for $115 million. The addition of SiC JFET technology is expected to complement ON Semiconductor Corporation (NASDAQ:ON)’s extensive EliteSiC power portfolio and enable it to address the need for high energy efficiency and power density in the AC-DC stage in power supply units for AI data centers.
5) Dollar General Corporation (NYSE:DG)
% Decline In 1 Year: ~45%
Number of Hedge Fund Holders: 45
Dollar General Corporation (NYSE:DG) is a discount retailer, which is engaged in providing various merchandise products. The company’s decline in the stock price reflects the broader market volatility and pressures in the overall retail sector, as it witnesses a complex mix of inflationary challenges, disruptions in the supply chain, and shifting consumer spending patterns. However, there is much optimism around Dollar General Corporation (NYSE:DG)’s stock after it announced its Back to Basics plan, which focuses on a wide range of factors.
These include better management of inventory and improved in-stock levels. Dollar General Corporation (NYSE:DG) continues to prioritize keeping the checkout area fully staffed and remains focused on eliminating stock-keeping units in a bid to reduce labor and inventory. The company has been emphasizing improving new store productivity and reevaluating its net unit growth outlook. Dollar General Corporation (NYSE:DG)’s efforts to reduce shrinkage and optimize inventory management can result in meaningful improvements in gross margins.
Dollar General Corporation (NYSE:DG)’s focus on improving price gaps versus competitors such as Walmart might attract more price-sensitive shoppers and fuel market share gains in key product categories. The company believes that the balance of new store growth and a significantly increased number of projects affecting its mature store base will further strengthen the company as a critical partner to communities in rural America.
4) The Estée Lauder Companies Inc. (NYSE:EL)
% Decline In 1 Year: ~51.8%
Number of Hedge Fund Holders: 49
The Estée Lauder Companies Inc. (NYSE:EL) is engaged in manufacturing, marketing, and selling skin care, makeup, fragrance, and hair care products. The company’s stock has seen the brunt of slowdowns in its 2 crucial markets. These are Mainland China and the travel retail sector. Furthermore, the global geopolitical uncertainty continues to impact its stock price. However, Piper Sandler upgraded the shares of The Estée Lauder Companies Inc. (NYSE:EL) to $98 and has reiterated its “Overweight” rating. The company’s management of costs, together with revenue growth potential, can result in a quicker recovery in total shareholder return.
Despite the challenges, The Estée Lauder Companies Inc. (NYSE:EL) has a portfolio of highly respected and globally recognized brands. Its strength in prestige beauty and skincare places it well to capitalize on long-term trends in the overall beauty industry. The company has announced it is expanding its PRGP (Profit Recovery and Growth Plan), which includes the restructuring program. The expanded plan focuses on further transforming the operating model to finance a return to sales growth, restoring a robust double-digit adjusted operating margin over the next few years, and continuing to manage external volatility, including potential tariff increases.
Appleseed Fund, an investment management company, released its third-quarter 2024 investor letter and mentioned The Estée Lauder Companies Inc. (NYSE:EL). Here is what the fund said:
“Appleseed Fund added four new names to the portfolio in the past six months: The Estée Lauder Companies Inc. (NYSE:EL), Willis Lease Finance (WLFC), Diana Shipping (DSX) and Gravity (GRVY). Estée Lauder is one of the world’s largest producers of cosmetics products, and valuation has become very attractive as this premier beauty company is suffering from a post-COVID-19 hangover.”
3) NIKE, Inc. (NYSE:NKE)
% Decline In 1 Year: ~31%
Number of Hedge Fund Holders: 75
NIKE, Inc. (NYSE:NKE) is engaged in the design, development, marketing, and sale of athletic footwear, apparel, equipment, accessories, and services worldwide. The company’s stock has struggled in the recent past as a result of macro pressures, fluctuating consumer trends, weakness in wholesale order books, and continued softness in digital sales. Amidst such challenges, Aneesha Sherman, an analyst from Bernstein, maintained a “Buy” rating on the company’s stock, maintaining the price target of $102.00. The analyst’s rating is backed by several factors relating to NIKE, Inc. (NYSE:NKE)’s strategic actions and brand positioning. It has made strong progress in clearing outdated inventory, mainly under the new CEO’s leadership.
This inventory management can result in new product launches, improving the brand’s appeal. Jordan and AF1 lines have demonstrated healthy signs, with strong clearance strategies resulting in improved selling prices and improved product turnover. Elsewhere, Piper Sandler confirmed the positive stance on NIKE, Inc. (NYSE:NKE), maintaining an “Overweight” rating and a price target of $90. The firm has maintained confidence in the company’s direction, emphasizing its proactive measures and innovation under Hill’s leadership.
Coho Partners, an investment management company released its Q2 2024 investor letter. Here is what the fund said:
“While we believe each of those companies is performing in line with or better than our expectations and that the moves lower are unjustified, both CVS and NIKE, Inc. (NYSE:NKE) reported disappointing performance in recent results. For Nike, the company reported mixed fourth quarter Fiscal 2024 results and weak Fiscal 2025 guidance, reflecting top line pressure from lifestyle product slowing, lower digital sales and increased macro headwinds in international markets. To manage through the decline in sports footwear and apparel demand, the senior leadership team is focused on cutting costs and reinvesting in marketing and innovation to drive sales. The company is starting to see green shoots for performance product innovation and has historically emerged stronger from these downturns due to benefits from a leading market position and scale.”
2) Merck & Co., Inc. (NYSE:MRK)
% Decline In 1 Year: ~34.0%
Number of Hedge Fund Holders: 86
Merck & Co., Inc. (NYSE:MRK) operates as a healthcare company. The company has seen a decline in Gardasil revenues in China, resulting in a reduction in revenue estimates, opines Evan Seigerman from BMO Capital. The China market continues to be a key growth driver for many pharmaceutical companies, and this slowdown has raised concerns in the investors’ minds about headwinds in this critical region. However, Evan Seigerman maintained a “Buy” rating on the company’s stock with a price target of $136.00.
Despite challenges, the analyst highlights Merck & Co., Inc. (NYSE:MRK)’s underlying strength. The analyst provides a strong area of growth, with higher organic demand and potential expansion in 2025 aided by upcoming trials. Seigerman focuses on Merck & Co., Inc. (NYSE:MRK)’s promising cardiovascular portfolio, and advancements in immunology and inflammation via strategic acquisitions, and partnerships, which are expected to drive growth. Elsewhere, Bank of America Securities also reiterated a “Buy” rating with a $120.00 price target.
GreensKeeper Asset Management, an investment management company, released its Q3 investor letter. Here is what the fund said:
“Merck & Co., Inc. (NYSE:MRK) was our second-largest detractor this quarter, declining -8.3%. MRK’s leading HPV vaccine, GARDASIL 9, faced challenges internationally due to inventory buildup within its Chinese distributor, which is expected to reduce shipments for the remainder of 2024. Despite this short-term impact, the long-term outlook for GARDASIL 9 remains promising. Meanwhile, the company’s $27 billion Keytruda cancer juggernaut continues to grow at a healthy clip, powering earnings growth.”
1) Advanced Micro Devices, Inc. (NASDAQ:AMD)
% Decline In 1 Year: ~36.7%
Number of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor company worldwide. The company’s stock has witnessed a decline of ~36.7% over the past year as investors are concerned about its competitive positioning. While to improve its share in the broader market it can elevate its spending levels, this might weigh over its margins and bottom line. Furthermore, there are concerns about its ability to be at par with Nvidia. However, Advanced Micro Devices, Inc. (NASDAQ:AMD) has released strong Q4 results, with healthy growth in client and data center revenue and a recovery in gaming revenue, says Morningstar.
The firm expects Advanced Micro Devices, Inc. (NASDAQ:AMD) to achieve a top-line CAGR of 17% from 2025 to 2029. It has modeled 28% growth in 2025 and 14% average annual growth from 2026 to 2029 as the company’s data center GPU business takes off in the AI applications. Furthermore, Advanced Micro Devices, Inc. (NASDAQ:AMD) managed to gain market share in the PC CPU market, with Intel’s manufacturing prowess witnessing numerous challenges.
Elsewhere, Wells Fargo analyst Aaron Rakers is bullish as the analyst believes that Advanced Micro Devices, Inc. (NASDAQ:AMD)’s stock is currently trading near relative valuation lows and provides strong risk-reward looking ahead into mid-2025. The analyst has pointed out the company’s ability to continue to fuel further EPYC server CPU share gains. White Falcon Capital Management, an investment fund manager, released its Q4 2024 investor letter. Here is what the fund said:
“During the year, we sold half of our stakes in Advanced Micro Devices, Inc. (NASDAQ:AMD) and Nu Holdings as they reached their intrinsic values. However, the decline in these stocks toward the end of the year provided us with an opportunity to add to our positions. In AMD’s case, the market has been disappointed by the company’s potential shortfall in AI chip revenues, which were previously forecasted to reach $10 billion in 2025. However, the factors required to justify the investment when the stock is priced at $220 per share are vastly different from those needed when the stock is at $120 per share. Yes, AMD’s AI chips and associated software are not competitive with Nvidia but this is now known and in the valuation. We believe this hyperfocus on AI ignores AMD’s other businesses where they continue to take advantage of Intel’s missteps. Importantly, AMD retains the potential to capture a small share of the AI chip market, which, given the market’s massive size, could be highly impactful for the company.”
While we acknowledge the potential of AMD as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than AMD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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