In this article, we shall go through the 5 best depressed stocks to invest in. To read our comprehensive analysis of the market in 2022, go directly and see 11 Best Depressed Stocks To Invest In.
5. Match Group Inc. (NASDAQ:MTCH)
Number of Hedge Fund Holdings: 55
Share Price (as of August 15): $69.37
YTD Declines (as of August 15): 48.23%
Based in Dallas, Texas, Match Group, Inc. (NASDAQ:MTCH) is an American internet and technology company which owns and operates the largest global portfolio of popular dating services including Tinder, Match.com, Hinge, and PlentyOfFish. The company reported an EPS of -$0.11, trailing behind estimates of $0.53 by $0.64 in Q2 2022. Furthermore, Match Group, Inc. (NASDAQ:MTCH) posted a total revenue of almost $794.5 million in Q2 2022.
The company reported a 52-week low of $63.24 per share on August 3. However, analysts are certain that the current valuation provides an excellent entry point for investors, categorizing the headwinds as transitory. Of the 22 Wall Street analysts who reviewed Match Group, Inc. (NASDAQ:MTCH) since May 2022, 11 have conferred the stock with a Strong Buy rating while 8 have afforded it a Buy rating. On August 11, Deutsche Bank analyst Benjamin Black lowered the firm’s price target on Match Group, Inc. (NASDAQ:MTCH) to $85 from $100, maintaining a Buy rating on the stock. The analyst said that it seems the new leadership has officially hit the ‘reset’ button, a fact which is evident in the latest earnings of the company. With Hinge continuing to perform spectacularly, Black is positive of Match Group’s (NASDAQ:MTCH) long-term potential, as he believes that its historic best-in-class product innovation gives the company a significant competitive advantage.
Hedge fund sentiment around Match Group Inc. (NASDAQ:MTCH) has slightly risen in the first quarter of 2022, with 55 hedge funds long the stock, having a cumulative stake value of $1.9 billion. This is up from 53 hedge funds which mentioned Match Group Inc. (NASDAQ:MTCH) in their investment portfolios in Q4 2021, having a total stake of $2.4 billion.
4. Horizon Therapeutics plc. (NASDAQ:HZNP)
Number of Hedge Fund Holdings: 56
Share Price (as of August 15): $64.90
YTD Declines (as of August 15): 39.48%
Horizon Therapeutics plc. (NASDAQ:HZNP) is a biopharmaceutical company which primarily focuses on the research, development, and commercialization of medicines which address critical needs for people impacted by rare and rheumatic diseases. Horizon’s (NASDAQ:HZNP) drug portfolio includes notable medications like Tepezza, Duexis and Buphenyl. As of August 11, the company posted a PE ratio of 21.93. Hedge fund sentiment around the stock has slightly fallen in the first quarter of 2022, with only 56 hedge funds long the stock, compared to 58 a quarter ago.
The company posted an annual revenue of $876.4 million in the second quarter of 2022. Horizon (NASDAQ:HZNP) did not meet earnings-per-share estimates in Q2 2022, with the biopharmaceutical company reporting an EPS of $1.07, trailing behind estimates of $1.34 by $0.27.
Horizon Therapeutics plc. (NASDAQ:HZNP) has an overall analyst rating of Strong Buy. With analysts largely agreeing that the current dip in Horizon’s (NASDAQ:HZNP) share price is transitory, it is the ideal time for investors to capitalize on this attractive entry point. The company is forecasting $4 billion in revenue in FY22, driven exclusively by the explosive growth of Tepezza. Furthermore, the company has 2 more potential blockbusters in Uplizna and Krystexxa, and its $3 billion acquisition of Viela Bio equips Horizon (NASDAQ:HZNP) with a pipeline that could generate $1 – $3 billion in peak revenues. And although Horizon’s (NASDAQ:HZNP) share price growth of 350% over the past 2 years is unlikely to repeat itself, forecasts suggest there is a 30% to 45% upside opportunity. Analysts have cited Horizon’s (NASDAQ:HZNP) resurgence to a three-fold approach namely; commercial execution, proven and disciplined business development strategy, and strong clinical development capability.
On August 3, Stifel analyst Annabel Samimy lowered the firm’s price target on Horizon (NASDAQ:HZNP) to $138 from $140, maintaining a Buy rating on the stock. In a research note, the analyst claims that while the Q2 results were disappointing, issues could largely be attributed to logistics rather than demand. Samimy maintains that while there is a need to navigate through the Tepezza miss challenge, Horizon (NASDAQ:HZNP) still remains one of the best positioned stocks for growth and longevity in biopharma.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holdings: 102
Share Price (as of August 15): $190.32
YTD Declines (as of August 15): 37.22%
Headquartered in Santa Clara, California, NVIDIA Corp. (NASDAQ:NVDA) is an American multinational technology company which specializes in the design of graphic processing units, application programming interface, and SoCs for the mobile computing and automotive market. As of the second quarter of 2022, Value Star Asset Management is the largest shareholder in the stock, with a total stake value of $6.7 billion.
Like many technology stocks, NVIDIA’s (NASDAQ:NVDA) share price took a massive hit in 2022. As of August 9, the company is back down to a $430 billion market cap, and down almost 50% from its 52-week highs, as NVIDIA Corp. (NASDAQ:NVDA) announced extremely weak preliminary earnings. Operating expenses have remained roughly constant, which will likely lead to profits being minimal. Moreover, NVIDIA Corp. (NASDAQ:NVDA) had a horrible second quarter in 2022, with incredibly low revenues due to declining gaming GPU revenues.
However, analysts expect this slump to be a transitory period for the company, owing to the strength of a 4xxx GPU launch and multiple other opportunities. Of the 43 Wall Street analysts who reviewed NVIDIA Corp. (NASDAQ:NVDA) since May 2022, 25 have given it a rating of Strong Buy and 8 have maintained a Buy rating on the stock. Truist analyst William Stein lowered the firm’s price target on NVIDIA Corp. (NASDAQ:NVDA) to $216 from $283, maintaining a Buy rating on the stock. The analyst warns that the weakness in demand for gaming may persist into Q3 before picking up in the January-April 2023 timeframe. Stein further explained that the underperformance of the Data Center and AI segments have more to do with supply chain issues, as he sees demand remaining constructive.
ClearBridge Investments mentioned NVIDIA Corp. (NASDAQ:NVDA) in their Q2 2022 investor letter. This is what they had to say:
“Chipmaker Nvidia (NASDAQ:NVDA) has also been pressured by multiple compression of higher growth companies and weakness in its gaming business. While Nvidia has grown into a top 10 position with its strong performance through late 2021, we have been consistently trimming the position to derisk against short-term volatility in its gaming business. The company is clearly exposed to the semiconductor cycle but also participates in the secular growth of cloud and AI adoption through its data center business. With these secular drivers intact and new products ramping up in the second half of the year, we are maintaining an overweight to the company.”
2. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holdings: 113
Share Price (as of August 15): $124.26
YTD Declines (as of August 15): 20.31%
Headquartered in Burbank, California, The Walt Disney Company (NYSE:DIS) is an American multinational mass media and entertainment conglomerate. It was a leader in the American animation industry in the 1950s, and has since diversified into live-action films, television, streaming, and amusement parks. Hedge fund sentiment around the stock has increased slightly, with 113 hedge funds having a collective stake of $5.2 billion in Q1 2022, up from 111 hedge funds having a stake value of $6.94 billion in Q4 2021. As of the second quarter of 2022, Ric Dillon’s Diamond Hill Capital is the largest shareholder in the stock, with a stake of $300.1 million.
Due to macro headwinds, The Walt Disney Company (NYSE:DIS) is having a tough time in 2022. Shares have underperformed more than 40% from their 2021 high, due to overall consumer spending weakness and broader macro uncertainties. The company posted a total revenue of $19.2 billion in the first quarter of 2022, up 29% year-over-year. On the other hand, an earnings-per-share of $1.19 in Q2 2022 was 32% below the result from three years ago, pointing to a depressed earnings environment. There was a significant drop in the operating income of the Media and Entertainment Distribution segment of the company, holding The Walt Disney Company (NYSE:DIS) back from stronger profitability. All of this was owing to record inflation, an inhibited spending power overall, rising interest rates, and global growth concerns. Sales were also down due to the company’s controversial response to the “Parental Rights in Education” legislation in Florida.
However, analysts are convinced that the current valuation provides an attractive entry point for long-term investors. The Walt Disney Company (NYSE:DIS) has demonstrated resilience with a sales and earnings beat that outperformed peers in the June quarter. The stock was well rewarded with post-earnings late-trading gains of as much as 7% as of August 10, with analysts expecting the momentum to sustain and progress favorably towards long-term growth and profitability goals. On July 27, Evercore ISI analyst Vijay Jayant lowered the firm’s price target on The Walt Disney Company (NYSE:DIS) to $38 from $44, maintaining an Outperform rating on the stock. Jayant claimed that he continues to favor Disney (NYSE:DIS) citing the company’s credible streaming strategy and synergized growth story.
Here is what Oakmark Funds had to say about The Walt Disney Company (NYSE:DIS) in their Q2 2022 investor letter:
“Disney (NYSE:DIS) is one of the most beloved consumer companies in the world. Its media business has a rich library of intellectual property, which provides a powerful engine for creating new content across the Disney (NYSE:DIS), Pixar, Marvel, and Star Wars brands. This content also contributes to the success of Disney’s (NYSE:DIS) theme parks, which generated nearly half the company’s earnings and grew more than 10% annually in the decade prior to the pandemic. Shares have fallen nearly 50% over the past year as investors worried about the company’s ability to transition its media business to a direct-to-consumer streaming world. This transition has required management to make investments in its Disney+ streaming service that are depressing profitability today. However, we believe these investments will ultimately produce attractive returns as Disney+ continues to grow subscribers and increase pricing over time. As a result, we were able to purchase shares at a substantial discount to our estimate of intrinsic value.”
1. Meta Platforms Inc. (NASDAQ:FB)
Number of Hedge Fund Holdings: 200
Share Price (as of August 15): $195.77
YTD Declines (as of August 15): 46.58%
Meta Platforms Inc. (NASDAQ:FB) had to report a declining revenue for the first time ever in the second quarter of 2022. Diluted earnings-per-share declined from $3.61 in Q2 2021 to $2.46 in Q2 2022, a decline of 33.0% year-over-year. Investors have been pushed into bullish and bearish camps, with strong arguments from both perspectives. However, of the 55 analysts that viewed Meta Platforms Inc. (NASDAQ:FB) since May 2022, 32 have maintained a Strong Buy rating on the stock. According to analysts, the business model of the company has remained rather intact, and there is also a reasonable probability for the vision of the Metaverse to work out. Analysts contend that as long as Meta Platforms Inc. (NASDAQ:FB) can grow even slightly in the next few years, the stock is greatly undervalued.
On July 28, RBC Capital analyst Brad Erickson lowered the firm’s price target on Meta Platforms Inc. (NASDAQ:FB) from $200 to $190, maintaining an Outperform rating on the shares. Erickson, in his research note, said that the Q2 2022 results, although disappointing, were largely in line with his estimations, but its Q3 2022 guidance came in 10% below sell-side consensus. However, according to the analyst, Meta Platforms Inc. (NASDAQ:FB) has great long-term growth potential as management has started to ramp monetization, stem the Tiktok market share loss, improve targeting, and investors have started to invest in Meta Platforms Inc. (NASDAQ:FB).
Here is what Boyar Value Group had to say about Meta Platforms Inc. (NASDAQ:FB) in their Q4 2021 investor letter:
“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms Inc. (NASDAQ:FB) (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”
Investor interest around the stock has decreased in the first quarter of 2022, with 200 hedge funds long the stock in Q1 2022, compared to 224 a quarter ago. Despite this, Meta Platforms (NASDAQ:FB) remains the best depressed stock to invest in.
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