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.
8. Noble Corporation plc (NYSE:NE)
Noble Corporation plc is an offshore drilling contractor for the oil and gas industry. It offers contract drilling services and operates drilling rings. The company’s stock is currently out of favor among investors, falling 23% this year.
According to 18 different analyst ratings, Noble Corporation has the highest target price of $44, which means it has a potential upside of 81% from the current levels if the bull scenario holds true. The stock is currently trading 19% below the lowest Wall Street price target of $29. With every Wall Street analyst bullish on the stock at current levels, there’s no reason not to like the stock. However, investors should note that there is some risk involved as the price targets are elevated because of the 50% dip in share price over the last year.
The company expects revenue between $3.25 billion to $3.45 billion in 2025. Adjusted EBITDA is projected within a range of $1.05 billion to $1.15 billion.
CFO Richard Baker offered insight into the company’s full-year prospects:
“Despite a more muted near-term outlook, we still expect 2025 to represent a nice step up in free cash flow compared to last year, facilitated in part by lower CapEx following the peak of the five-year SPS cycle in 2023 and 2024 for both the legacy diamond and Noble fleet.”
Going by the above, one can say with a fair amount of certainty that the management is confident of sustaining the rather high dividend yield of 8%.
7. Civitas Resources, Inc. (NYSE:CIVI)
Civitas Resources, Inc. operates as a production and exploration company that specializes in the development, acquisition, and production of crude oil and liquids-rich natural gas. The stock is down 24% this year.
CIVI stock is considerably undervalued if one goes by the analysts’ consensus. For instance, Wall Street has the highest target price of $91 on the stock, a significant upside from current levels. A major part of the recent price drop came after a disappointing Q4 earnings announcement.
Despite this slight miss, CIVI reduced operating costs and grew total volumes. The company generated a hefty amount of free cash flow and returned 70% of FCF to its shareholders. It has guided for decreased production in Q1 but the growth is projected to rebound in the middle of this year. Investors betting on a turnaround will have high hopes from the new management after both the COO and CTO were fired last month.
There are a lot of concerns with the company’s future prospects but the stock price now reflects most of them, offering a good buying opportunity.
6. Skyworks Solutions, Inc. (NASDAQ:SWKS)
Skyworks Solutions, Inc. is a developer, manufacturer, designer, and marketer of proprietary semiconductor products. The company’s products include antenna tuners, automotive tuners and digital radios, demodulators, amplifiers, and other products. The stock is following a downward trend, falling about 25% this year.
Skyworks has in the past relied on Apple for a good chunk of its revenue. In fiscal 2024, it generated 69% of its revenue from Apple. This is a huge liability for investors, especially considering how Apple eventually moves the production of its equipment in-house, or launches its own versions of the products it previously bought from others. We saw this with both the iPhone 16 and 17, where Apple reduced the number of RF solutions orders, tanking SWKS stock.
Apart from this, the company also faces tough competition from the likes of Qualcomm. Unfortunately, it is not simply a case of buying the dip for Skyworks investors. They need to see business improvement before jumping in. The management has announced a share buyback program worth $2 billion and expects healthy gross margins of over 45% in 2025. It could return to growth after Q2, as per the management, but betting on the stock remains a risky bet without clear plans to solve its Apple problem.
5. Viatris Inc. (NASDAQ:VTRS)
Viatris Inc. is a healthcare company that operates in Greater China, Emerging Markets, Developed Markets, and JANZ segments. It provides generic drugs, biosimilars, prescription brand drugs, and complex generic drugs. The company’s stock is experiencing a downturn, falling 26% this year.
Drug stocks are under pressure this year due to Donald Trump’s criticism of companies operating from outside the US. While the US follows strict regulatory standards when it comes to drug manufacturing even outside the country, there is an over-reliance on other countries, which the US admin doesn’t like, especially in the scenario where a war breaks out.
Apart from the above, Viatris has business headwinds it needs to deal with. While Europe is expected to show strong growth in 2025, the same can’t be said about North America, which continues to face pressure from competitors. It plans to continue its dividend policy and add $500 to $600 million in share buybacks, but investors need to see business improvements before they can take comfort in the payouts.
4. Marriott Vacations Worldwide Corporation (NYSE:VAC)
Marriott Vacations Worldwide Corporation operates as a travel company and provides vacation ownership, rental, exchange, and resort & property management businesses. It operates through Third-Party Management and Vacation Ownership and Exchange segments. The stock has fallen 26% so far this year.
Marriott Vacations concluded 2024 strongly with its resilient business model. Its operating revenue for Q4 went up by 11.1% YoY, while for the full year, it increased by 5.1% YoY. Q4 proved to be a strong quarter for the company as it demonstrated a sustained recovery from the weak performance of Q1 and Q2 of 2024.
The company offers an attractive dividend yield of 4.80%, which is a plus point for income-oriented investors. With a lower valuation compared to last year and a healthy dividend yield, the stock is one to have on the watchlist.
3. Polaris Inc. (NYSE:PII)
Polaris Inc. is an engineer, manufacturer, designer, and marketer of power sports vehicles. The company operates in On-Road, Off-Road, and Marine segments. It distributes its products through distributors, dealers, and retail and e-commerce marketplaces. The company’s stock is experiencing a decline of 27% this year.
The reason for the dip is the company’s 2025 guidance, threatened by both lower revenue and thinning margins. After reporting a 24.6% YoY decline in revenue at its Q4 earnings, the firm further disappointed with a 1% to 4% reduction in revenue for the year 2025. The EPS could go down by as much as 65% as margins stay under pressure from the employee profit-sharing program, reductions in production, and negative mix.
Investors willing to bet on the rather high 6.2% yield may be able to take comfort in the CEO’s comments at the previous quarter’s earnings call:
“Polaris has weathered storms before, and we believe we are positioning our organization to emerge from this downcycle even stronger.”
2. Edison International (NYSE:EIX)
Edison International is an electric power generator and distributor company. It delivers electricity to approximately 50,000 square miles of area through its electrical infrastructure. The company serves public authorities, commercial, residential, industrial, agricultural, and other sectors. The stock is following a downward trend, declining by 27% this year.
EIX is struggling because of the aftermath of the Los Angeles Wildfires, with investigations underway to determine if the company’s equipment was responsible for starting the fires. Earlier this month, the company was sued by Los Angeles County, but it could take months before the company’s role in the wildfires can be determined and the lawsuits settled.
On the earnings front, things are healthy. Last month’s earnings report showed an EPS of $4.93 for the previous year, comfortably above the midpoint of its guidance. According to the CEO Pedro Pizarro, the firm is on track to register an EPS annual growth rate of 5% – 7% till 2028.
1. Newell Brands Inc. (NASDAQ:NWL)
Newell Brands Inc. is the manufacturer, designer, source, and distributor of commercial and consumer products. It operates through the Learning and Development, Outdoor and Recreation, and Home and Commercial Solutions segments. The company’s stock is experiencing a downturn, falling by 35% this year.
After announcing Q4 results last month, the stock tanked due to poor guidance. Net sales are expected to drop by 4% to 2% due to business exits and foreign exchange, while core sales are projected between -2% to +1%. Operating margins are anticipated to grow by 9% to 9.5%.
Peterson outlined:
“We expect sequential improvement, with the first half being down low single digits and the back half turning slightly positive.”
It is this inflection at the halfway stage of the year that investors can bet on. Let’s not forget that the company is insulated from the impact of tariffs, having a considerable manufacturing base inside the US, as pointed out by the CEO during the earnings call Q&A:
“We have significant U.S. manufacturing capability, including writing, coolers, food storage, and candles.”
NWL is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 29 hedge fund portfolios held NWL at the end of the fourth quarter, which was 28 in the previous quarter. While we acknowledge the potential of NWL as a leading investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as NWL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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