We recently compiled a list of the 18 Best 52-Week Low Stocks to Buy Now According to Short Sellers. In this article, we are going to take a look at where Comcast Corporation (NASDAQ:CMCSA) stands against the other 52-week low stocks.
Buying low and selling high is a popular investment strategy that value investors inspired by Warren Buffett have perfected over the years. The legendary investor has consistently emphasized the importance of identifying stocks of undervalued companies with significant growth prospects and holding onto these investments for an extended period.
Some of the most undervalued stocks to buy are those trading near their 52-week lows, backed by solid underlying fundamentals. A lot of these companies have durable competitive advantages but have fallen due to an overreaction by pessimists to short-term headwinds. The companies should boost strong brands in their respective fields with high barriers to entry.
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Value investing means paying attention to more than just the stock price but by focusing on valuation. A pullback often creates buying opportunities where quality companies become available at low price-to-earnings multiples or low price-to-sales ratios relative to their industries.
Over the past 20 years, 95% of investment firms have failed to beat the S&P 500. In contrast, Buffett has averaged an annual return of 20%, nearly double the S&P 500 over the same period.
With the S&P 500 up by about 20% for the year, most stocks are trading at premium valuations above their 52-week highs. The impressive gains have come amid unfavorable market conditions, with interest rates near all-time highs of between 5.25% and 5.50%.
On the other hand, some stocks have pulled back significantly and are currently trading close to the 52-week lows, their core business hurt by the high interest rate environment. Additionally, some of the stocks have underperformed due to deteriorating macroeconomics. Concerns that the U.S. economy could plunge into recession have always hurt some of the stock’s sentiments. The U.S. Federal Reserve is expected to cut interest rates in September and these stocks might not be near their lows for long.
According to Stuart Keiser, Citi head of equity trading strategy, the high interest rate environment has left the market in a very unstable situation amid a “ tricky environment.” Likewise many investors are on edge as to whether there will be a soft or hard landing. Keiser said, in an interview on CNBC’s Fast Money:
“Basically you had a 12 to 18 month period of positive economic surprise of what I would call higher for longer growth strong rate cuts getting pushed out. Markets were able to deal with that because growth was really positive. Since late June economic data surprised negative, economic data momentum negative. The market is now trading instead of higher for longer trading, a bit of growth slowdown. That’s why you are getting this schizophrenia because as growth decelerates you get into a borderline at which the risk becomes really big that you could go hard landing instead of soft landing. So our view is that the risk reward is not what it was a couple of months back”
Amid the market outlook uncertainty, focusing on stocks near the 52-week lows is a sure way of balancing the risk reward amid the premium valuation in play. While the focus has been on artificial intelligence investment plays, stocks in various sectors are trading at discounted valuations and are sure to offer significant returns.
Our Methodology
To compile the list of the best 52-week low stocks to buy now, according to short sellers, we first screened for stocks that were trading near their 52-week lows (0-10% range) using the Finviz stock screener. Next, we looked at their short interest and picked the stocks with the lowest short interest that were the most popular among elite hedge funds. The stocks are ranked in descending order of their short interest.
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).
A couple watching their favorite show on TV, enjoying the entertainment network service.
Comcast Corporation (NASDAQ:CMCSA)
52 Week Range: $36.43 – $47.30
Current Share Price: $40.24
Number of Hedge Fund Holders: 61
Short interest rate: 1.44%
Comcast Corporation (NASDAQ:CMCSA) is a communication services company that operates as a media and technology company offering residential broadband and wireless connectivity services. Its Business Services Connectivity segment offers broadband wireline voice and wireless services.
CMCSA’s lackluster performance compared to wider market benchmarks over the last year can be linked to its reduced customer acquisition rate in the initial three months. The firm experienced a customer loss of 65,000 during this period. However, the company surpassed Wall Street’s expectations for both revenue and earnings per share (EPS) in its quarterly report on April 25.
Comcast Corporation (NASDAQ:CMCSA) brought in $30.06 billion in revenues during the first three months, surpassing the $29.87 billion market forecasts. It also delivered $3.86 billion in net profit, or a profit per share (EPS) of 97 cents, which was higher than the market’s predictions of $3.63 billion and 91 cents per share, respectively.
It also saw strong growth in its mobile service segment, with an increase of 289,000 wireless subscriptions in the period. However, there was a decline of 487,000 in its cable and broadband customer base and 65,000 in its broadband customers. This drop in broadband subscribers has been a recurring problem for the entertainment and media conglomerate in the past few quarters.
Comcast Corporation (NASDAQ:CMCSA) stands out as one of the best 52-week low stocks to buy now, according to short sellers, as it has increased its dividend by 6.9% to $1.24 a share. The board has also approved a $15 billion stock buyback program affirming its dedication to returning value to shareholders. The stock appears to be trading at a discount close to its 52-week low with a forward price-to-earnings multiple of 9 while offering a 3.11% dividend yield. The percentage of shares short as of the end of July stood at 1.44%
As per Insider Monkey’s database, 61 hedge funds owned stakes in Comcast Corporation (NASDAQ:CMCSA) at the end of June, down from 63 in the previous quarter. Among these hedge funds, First Eagle Investment Management was the company’s leading stakeholder in Q2, with stakes worth $1.25 billion.
Overall CMCSA ranks 7th on our list of the 52-week low stocks to buy now according to short sellers. While we acknowledge the potential of CMCSA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CMCSA, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
