5 Best Beaten Down Stocks to Buy Now

In this article, we will take a look at the 5 best beaten down stocks to buy now. If you want to see more stocks in this selection, go to the 12 Best Beaten Down Stocks to Buy Now.

5. Nu Holdings Ltd. (NYSE:NU)

Number of Hedge Fund Holders: 33

YTD Stock Price Performance: -46%

Nu Holdings Ltd. (NYSE:NU) is a Sao Paulo, Brazil-based provider of digital banking platforms.

Experts regard Nu Holdings Ltd. (NYSE:NU) as one of the most successful financial institutions in the Latin American region, with a customer base of 70 million. The relatively weak stock performance is a surprising fact because the rising interest rate was expected to be favorable for financial institutions like Nu Holdings Ltd. (NYSE:NU). The company is focused on coming up with new products related to mortgages, working capital requirements and increasing its loan portfolio as well. Nu Holdings Ltd. (NYSE:NU) has an asset-light business model and inducts new customers easily because of its easy-to-apply loan process. Analysts think the company has the potential to experience a strong rise in stock price due to its efficient growth plans.

Atmos Capital raised its stake in Nu Holdings Ltd. (NYSE:NU) by over 2600% during the third quarter of the year.

4. Lyft, Inc. (NASDAQ:LYFT)

Number of Hedge Fund Holders: 37

YTD Stock Price Performance: -60%

Lyft, Inc. (NASDAQ:LYFT) is a San Francisco, California-based ride-hailing and food delivery service provider.

Itay Michaeli at Citi assigned Lyft, Inc. (NASDAQ:LYFT) stock a Buy rating with a target price of $45 in a report published on December 5. There is a widespread belief amongst experts that Lyft, Inc. (NASDAQ:LYFT) had a strong October in terms of sales, and the current economic downturn has already been priced into the stock. Furthermore, the Street is bullish on the stock as it believes the company can emerge as a stronger entity with a laid-out plan to achieve higher profitability. The risk and reward profile for Lyft, Inc. (NASDAQ:LYFT) is skewed towards reward from the current depressed levels.

As of Q3 2022, Lyft, Inc. (NASDAQ:LYFT) was held by 37 hedge funds.

3. Farfetch Limited (NYSE:FTCH)

Number of Hedge Fund Holders: 50

YTD Stock Price Performance: -70%

Farfetch Limited (NYSE:FTCH) is a London, UK-based e-commerce platform that sells products and accessories from over 700 luxury boutiques and brands globally.

On December 5, Oliver Chen at Cowen assigned Farfetch Limited (NYSE:FTCH) stock a target price of $8, along with an Outperform rating. The company intends to reach a gross merchandise value (GMV) of more than $10 billion by 2025 with an EBITDA margin of 10%. Furthermore, Farfetch Limited (NYSE:FTCH) is working aggressively to achieve profitability and foresees its marketplace to grow by 8% to 10% annually and achieve a profit margin of nearly 5%. There is a widespread belief that the stock’s selloff has been overdone, providing an attractive entry point for potential investors.

Here’s what Polen Capital said about Farfetch Limited (NYSE:FTCH) in its Q1 2022 investor letter:

“We also initiated a position in global luxury fashion e-commerce marketplace Farfetch in the first quarter and took advantage of meaningful weakness in the company’s share price during the period. Farfetch previously had too large a market cap for the Portfolio, but it has since moved to a level where it’s appropriate to own it – both in this Portfolio and in our smid-cap strategy. The company’s fundamentals remain attractive as indicated by the compelling results Farfetch reported in February.

The company remains an early mover with “the world’s only truly global marketplace for luxury at scale”. Farfetch has broader reach around the world with a diversity of brands that is much larger than its competitors. Many of the items it sells are exclusive. Our research shows that its brand assortment, brand image, geographic breadth, an inventory-light business model, a more compelling offering for luxury partners, and artificial intelligence are all competitive edges for the company. We believe Farfetch is well-positioned for the continued market share shift from offline to online in this category. The personal luxury goods market has trailed other categories in online penetration, but consumer behaviors and preferences shifted as a result of the pandemic creating more comfort with purchasing goods like this online. Changed behavior and the general shift to a higher portion of Millennial and Gen Z luxury shoppers supports this continued shift as does the growth in emerging market demand.”

2. Warner Bros. Discovery, Inc. (NASDAQ:WBD)

Number of Hedge Fund Holders: 61

YTD Stock Price Performance: -45%

Warner Bros. Discovery, Inc. (NASDAQ:WBD) is a New York-based media conglomerate that came into being in April 2022 following the spin-off of WarnerMedia by AT&T Inc. (NYSE:T) and its merger with Discovery Inc.

On December 7, Jessica Reif at Bank of America termed Warner Bros. Discovery, Inc. (NASDAQ:WBD) as the provider of the best value in the media industry. She assigned the stock a Buy rating with a target price of $21. The analyst noted that Warner Bros. Discovery, Inc. (NASDAQ:WBD) had executed significant changes on operational and strategic levels, and this will result in annual synergies of over $2 billion from 2023. The analyst thinks Warner Bros. Discovery, Inc.’s (NASDAQ:WBD) ability to monetize has improved across various divisions. The company is in the middle of restructuring to streamline its operations further.

Here’s what Distillate Capital Partners LLC said about Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its Q1 2022 investor letter:

“Warner Bros. Discovery was the next largest position added to the portfolio and came after a nearly-50% price decline in the quarter. Consequently, the stock offers a mid-teens free cash flow yield and is expected to earn nearly half of its enterprise value in free cash over the next three years.”

1. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 88

YTD Stock Price Performance: -20%

Tesla, Inc. (NASDAQ:TSLA) is an Austin, Texas-based designer and manufacturer of EVs.

The company has an industry leadership position in technology but has seen a decline in stock price due to uncertain macroeconomic circumstances slowing down the sales of EVs. Furthermore, the focus of the company’s CEO Elon Musk has been called into question in recent times as he has recently acquired the social media and microblogging site Twitter for a huge sum of $44 billion.

Joseph Spak at RBC Capital thinks that Tesla, Inc. (NASDAQ:TSLA) stock could remain under pressure as expectations related to gross profit margin are recalibrated amongst the investor community. The company has slashed its prices in the Chinese market to grow its market share and compete with the local Chinese EV makers. However, once the expectations are recalibrated, Tesla, Inc. (NASDAQ:TSLA) has the potential to generate healthy earnings and cash flows for its investors. The analyst issued the report on December 15 and assigned Tesla, Inc. (NASDAQ:TSLA) stock an Outperform rating with a target price of $225.

Baron Funds shared its outlook on Tesla, Inc. (NASDAQ:TSLA) in its Q3 2022 investor letter. Here’s what the firm said:

“Tesla, Inc. (NASDAQ:TSLA) makes fully electric vehicles (EVs), related software offerings, solar and energy storage products, and battery cells. After a tough second quarter that included a prolonged shutdown of one of Tesla’s key manufacturing facilities in Shanghai, the company demonstrated a significant 40% sequential increase in production volumes resulting in another quarterly record of production and deliveries. Despite the second quarter complexities, inflationary pressures, and production ramp-up of two new facilities (Berlin and Austin), the company exceeded Wall Street expectations in the second quarter. It maintained healthy 26% normalized gross margins, achieved industry-leading 18% adjusted operating income margins, and has generated over $14 billion of cash from operations over the past year. Moreover, due to Tesla’s high level of vertical integration and U.S. manufacturing capacity, the company is expected to be one of the key beneficiaries of the Inflation Reduction Act, qualifying for significant manufacturing and consumer-related incentives. We believe these incentives can add up to tens of billions of dollars over the coming decade, while also enhancing Tesla’s competitive advantage versus other automakers. The company also held its second artificial intelligence day, which presented continued advancements in its vehicle self-driving program and showcased its rapidly evolving humanoid robot developments (check out the Optimus videos on YouTube). We continue to believe Tesla is well positioned to benefit from complementary tectonic shifts in the automotive industry, including electrification, autonomous driving, and shared mobility. And, yes, Tesla is still effectively debt free, with over $18 billion of cash on its balance sheet, and investors are even speculating about a stock buyback, a far cry from worries of bankruptcy just a few years ago.”

You can also take a peek at the 11 Best TaaS Stocks To Invest In and 11 Best Penny Stocks To Buy.

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