The stock market continues to face significant volatility, with major indices continuing their decline from last week. The S&P 500 is down nearly 2%, while the Nasdaq is equally struggling at over 2.5% in the red.
The implementation of new tariffs had already spooked the market. However, it was dealt an additional blow as the core Personal Consumption Expenditures index reading came in hotter than expected. Inflation and recession concerns are dominating the market, but this also presents an opportunity for outperformance.
Stocks that are oversold as a result of the current dip present a great opportunity for outperformance in 2025. We decided to come up with a list of such stocks.
To ensure that these stocks were suitable for a bear market, were it to persist, we also added an additional criterion of a strong dividend yield so that investors can accumulate dividends while they wait for a market turnaround. For this list, we only considered stocks with a market cap of at least $2 billion that are down considerably since the start of the year.
A woman purchasing groceries at a Target store, with a cart full of products.
10. Helmerich & Payne, Inc. (NYSE:HP)
Helmerich & Payne, Inc. is a drilling solutions and technologies provider for oil and gas production and exploration companies. It operates in the Offshore Gulf of Mexico, International Solutions, and North America Solutions segments. The company’s stock is experiencing a downturn as it has fallen 22% this year.
According to 18 different analyst ratings, the company has the highest target price of $43, which means it has a potential upside of about 70% from the current levels if the bull scenario plays out. Combined with the 4% dividend yield, the stock seems quite attractive at current levels.
The company recently announced the completion of the KCA Deutag acquisition, which is an international growth strategy aimed at improving the company’s profitability. This strategic acquisition is expected to strengthen cash flows, boost international growth, and improve scale and diversification.
Management highlighted the strong margins and free cash flow in the recent earnings report:
“One thing that strikes me as I look at our results across the last couple of years is the resilience of our margins in North America. Accomplished because of the hard work our sales and operations teams have delivered. And while we may see some quarterly variation, our disciplined and customer-centric approach continues to generate consistent margins and free cash flow.”
9. Target Corporation (NYSE:TGT)
Target Corporation is a general merchandise retailer. It offers shoes, apparel for women, men; and babies, accessories, beauty products, and jewelry. The company also provides food and beverage products, dry and perishable groceries, electronics, and luggage. The stock is following a downward trend, losing 23% this year.
Target Corporation’s Relative Strength Index (RSI) is hovering around the 30 mark, making it one of the most oversold S&P 500 stocks despite its fundamental strength. The stock has struggled due to poor earnings resulting from a tough retail environment as well as competition from giants like Walmart and Amazon. This pessimism has brought the stock down to levels seen during the pandemic in 2020.
There is reason to believe that a reversal is around the corner. First, the company already guided lower after a poor Q3 so it’s unlikely that it misses the earnings again. Second, the valuation is already extremely cheap, trading at 11 times 2027 earnings, compared to 30 for Walmart and 47 for Costco. This is the ideal time to start accumulating the stock as a long-term play.
