In this article, we talk about 11 best falling stocks to buy now. If you wish to skip our detailed analysis of the latest market situation, go directly to 5 Best Falling Stocks To Buy Now.
After a brutal 2022 which saw the S&P500 shed more than 21% in the first half of the year, Q2 earnings are coming in, and they're not as bad as we'd think. Despite sky-high inflation, supply chain issues, labor shortages, and a strong US dollar which is affecting the overseas earnings of American conglomerates, many prominent companies beat estimates and issued positive guidance. Of the 56% of S&P500 companies that had issued their quarterly earnings reports by July 29, 73% of them outperformed earnings per share (EPS) estimates. This puzzled many investors who were bracing for a full-blown recession, and led to a nearly 7% rally for the S&P500 in the last one month as of August 9.
Another crucial tailwind for the bruised economy came in the form of employment figures for the month of July, which showed 528,000 jobs added during the month, well above the average of 388,000 jobs gained during the previous four months. The employment rate slid to 3.5%, the lowest figure since 1969 and equal to the pre-pandemic rate of February 2020. The leisure and hospitality industry led the way with 96,000 jobs added, whilst employment in professional services, healthcare, construction, manufacturing, and mining also picked up. Now, many feel that a recession is farther off than previously expected, and investors are continuously on the lookout for strong performers within a uniquely uncertain macro environment.
In the following list, we unpack 11 falling stocks that offer investors sound investment opportunities in the medium-to-long term. These include names like AT&T Inc. (NYSE:T), The Walt Disney Company (NYSE:DIS), and Meta Platforms, Inc. (NASDAQ:FB), along with others mentioned below.
Luis Louro / shutterstock.com
Stocks that are down on a year-to-date basis and have long-term growth prospects were chosen for this article. To quantify the popularity of each stock among professional money-managers, we've provided hedge fund sentiment which has been calculated using our database of 900+ elite hedge funds.
Best Falling Stocks To Buy Now
11. DoorDash, Inc. (NYSE:DASH)
Number of Hedge Fund Holders: 52 Year-to-Date Share Price Decline (as of August 9): 50.06%
First up is food delivery platform DoorDash, Inc. (NYSE:DASH), which has suffered a downfall of more than 50% in the year to date, as the pandemic-driven boom in online food orders subsided and investors flocked towards safe haven stocks amid the ongoing market volatility.
But food delivery is a secular growth story, and DoorDash, Inc. (NYSE:DASH) continues to command the majority market share of the industry in the United States, which more than doubled in value during the pandemic. DoorDash recently announced its Q2 results, and reported order growth of 23.5% in comparison to the same period over last year, and posted a record number of daily active users and DashPass members despite the ongoing macro headwinds. EPS beat expectations by $0.11, whilst revenue of $1.61 billion also beat analysts' estimates by $86.54 million.
Needham analyst Bernie McTernan on August 5 kept a 'Buy' rating on DoorDash, Inc. (NYSE:DASH) shares and raised the price target to $115 from $100. The analyst observed that the stock offers a compelling growth opportunity using its market share lead in restaurant to improve density. McTernan also noted that the company's paid membership feature called DashPass should help it navigate the current market climate as it offers a good value proposition to customers.
As of the end of the first quarter of 2022, 52 out of the 912 hedge funds tracked by Insider Monkey held positions in DoorDash, Inc. (NYSE:DASH), with a collective price tag of $4.49 billion. The same number of hedge funds were bullish on DASH shares a quarter earlier as well. The company's largest Q1 shareholder was Tiger Global Management LLC, with a nearly $961 million position.
Stocks such as AT&T Inc. (NYSE:T), The Walt Disney Company (NYSE:DIS), and Meta Platforms, Inc. (NASDAQ:FB), in addition to DoorDash, Inc. (NYSE:DASH), are some of the best beaten-down stocks to buy now for long-term gains.
10. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 54 Year-to-Date Share Price Decline (as of August 9): 77.66%
Snap Inc. (NYSE:SNAP) has had a terrible 2022, with growing competition, Apple's privacy law changes, and slowing ad revenue amidst a weak macro backdrop leading to substantial losses for the firm. Its EPS for Q2 2022 was reported $0.01 above estimates, whilst revenue of $1.11 billion missed analysts' estimates by $23.58 million.
Regardless, long-term investors can buy into Snap Inc. (NYSE:SNAP) at an attractive valuation, with the stock down almost 78% since the start of the year as of August 9. Citi analyst Ronald Josey on July 22 reiterated a 'Buy' rating on the company shares, and revised the price target to $16 from $29. Notwithstanding the challenges of operating within the current environment, the analyst is encouraged by growth in the firm's daily active users and engagement figures during the second quarter, and expects revenue growth to rebound in 2023 as the company remodels its cost structure.
A total of 54 hedge funds were long Snap Inc. (NYSE:SNAP) at the end of the first quarter of 2022, with aggregate positions worth $2.7 billion. Its largest shareholder in Q1 2022 was Lone Pine Capital, with a $664 million position.
Baron Funds, an investment management firm, discussed the prospects of Snap Inc. (NYSE:SNAP) in its Q4 2021 investor letter, stating:
“Snap Inc. is the leading social network among teens and young adults in North America and a growing number of overseas markets, including Western Europe and India. Shares fell this quarter on a greater-than anticipated impact from Apple’s new privacy changes for iOS mobile devices. These changes made it more difficult for Snapchat to measure the effectiveness of ads shown on its platform. We believe this is a near-term, industry-wide issue for which Snap is already developing a solution. Longer term, we continue to view Snap favorably as the company sustains its rapid pace of product innovation and expands its premium partnerships with advertisers.”
9. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 66 Year-to-Date Share Price Decline (as of August 9): 34.45%
Airbnb, Inc. (NASDAQ:ABNB) operates an online platform which connects homeowners with travelers looking for short-term rental accommodation. Despite analysts' expectations of low travel demand amid recession fears, and the stock being down 34.45% since the start of the year, Airbnb, Inc. (NASDAQ:ABNB) recently posted positive Q2 earnings. Quarterly revenue recorded 58% year-on-year growth to come in at $2.1 billion. EPS of $0.73 also exceeded analysts' forecasts by $0.21. Buoyed by its strong financial performance, the company also announced a $2 billion share repurchase program.
Baird analyst Colin Sebastian in early August lowered the firm's price target on Airbnb, Inc. (NASDAQ:ABNB) to $140 from $155 and reiterated an 'Outperform' rating on the shares. He sees some difficulties in the near-term given tough year-over-year comparisons and guidance that is slightly below elevated Street expectations. However, the analyst remains bullish in the long term, with opportunities for further margin expansion and ongoing market share gains amid very large total addressable markets (TAMs).
A detailed review of the 900+ hedge funds in the Q1 database of Insider Monkey disclosed 66 hedge funds with combined stakes worth $3.69 billion in Airbnb, Inc. (NASDAQ:ABNB). This is up from 63 hedge funds with $2.97 billion in aggregate positions a quarter earlier. Jim Simons' Renaissance Technologies was the most prominent Q1 shareholder of Airbnb, Inc. (NASDAQ:ABNB), with a stake worth more than $584 million.
Here is what ClearBridge Investments had to say whilst discussing the prospects of Airbnb, Inc. (NASDAQ:ABNB) in its Q2 2022 investor letter:
“Airbnb is the leading online platform for alternative accommodations globally. We believe the company is well-positioned to capitalize on the large and growing market for travel and experiences, with the potential for growth in e-travel to be higher post pandemic due to pent-up demand and increased work from anywhere flexibility. Airbnb is highly profitable today, though we see room for further margin expansion ahead. Furthermore, secular underpinnings to growth, a more variable cost structure and strong balance sheet should help the company drive better through-cycle performance as compared to its consumer discretionary peers.”
8. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 68 Year-to-Date Share Price Decline (as of August 9): 22.04%
Abbott Laboratories (NYSE:ABT) is a global pharmaceutical giant which deals in the provision of healthcare products and medical devices. As one of the world's largest providers of diabetes care products and Covid testing kits, along with a range of blockbuster drugs that generate more than $1 billion in revenue per annum, Abbott Laboratories (NYSE:ABT) is a compelling long-term buy, especially considering that the shares are currently down 22% in the year to date as of August 9.
On July 21, RBC Capital analyst Shagun Singh kept an 'Outperform' rating on Abbott Laboratories (NYSE:ABT) shares and decreased the price target to $132 from $143. The company posted solid Q2 results with Covid testing sales outpacing estimates by $1 billion, according to the analyst. Singh attributes the post-earnings stock price decline to the worsening macro pressures and the impact of staffing shortages and Chinese Covid lockdowns on the pace of medical device utilization.
Reporting its Q2 earnings on July 20, Abbott Laboratories (NYSE:ABT) posted EPS of $1.43, outperforming estimates by $0.29. Quarterly revenue of $11.26 billion was also above analysts' expectations by $856.54 million.
As of the end of Q1 2022, 68 hedge funds were long Abbott Laboratories (NYSE:ABT), with aggregate positions worth $4.09 billion. This shows a positive trend from the previous quarter where 64 hedge funds were stakeholders in the company.
Diamond Hill Capital, an asset management firm, discussed the market position and future prospects of Abbott Laboratories (NYSE:ABT) in its Q1 2022 investor letter, stating:
“Abbott Labs announced a recall of its infant formula brand Similac® in the US. Though the recall will impact near-term revenues, we are not concerned about any long-term impacts. We remain optimistic about the company’s prospects over the long run because, in our view, it is one of the highest quality names in health care with a talented management team that makes smart capital allocation decisions. Abbott also has leading health care and consumer franchises with a particularly strong competitive position in the medical device business. Abbott continues to launch innovative products in key strategic areas (such as diabetes, structural heart and diagnostics), which should help drive not only revenue growth but margin expansion.”
7. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 74 Year-to-Date Share Price Decline (as of August 9): 5.60%
AT&T Inc. (NYSE:T) is a telecommunications giant headquartered in Texas. The company shares have registered a decline of 5.6% since the start of 2022 and 12.22% in the last month alone, as of August 9. Hedge fund sentiment around AT&T Inc. (NYSE:T) was positive at the end of the first quarter of 2022, where 74 hedge funds were bullish on the company shares. In contrast, 70 hedge funds held stakes in the firm a quarter earlier.
With a market cap of roughly $129 billion and a dominant position in the wireless mobile services industry, AT&T Inc. (NYSE:T) is one of the best falling stocks to own for investors with a long-term investment horizon. Furthermore, a P/E (price to earnings) ratio of 6.68 also means AT&T Inc. (NYSE:T) is currently trading below its intrinsic market value.
The company's EPS for the second quarter came in at $0.65, outperforming Street estimates by $0.03. Revenue figure of $29.64 billion also exceeded market estimates by $194.21 million.
Morgan Stanley analyst Simon Flannery observed on July 22 that the recent sell-off in AT&T Inc. (NYSE:T) shares is an "over-reaction," and maintained an 'Overweight' rating with a $22 price target. Deutsche Bank analyst Bryan Kraft kept a 'Buy' rating on AT&T shares with a $22 price target, down from $24. He noted that the company's latest quarterly results showed strong execution in wireless customers and average revenue per user growth, combined with a weaker performance in Business Wireline and free cash flow conversion as macroeconomic headwinds start to have an impact.
In its investor letter for the fourth quarter of 2021, here is what asset management firm Weitz Investment Management had to say about AT&T Inc. (NYSE:T):
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T Inc. (NYSE:T) to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
6. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 76 Year-to-Date Share Price Decline (as of August 9): 34.28%
Intel Corporation (NASDAQ:INTC) is an American IT giant which deals in the production of semiconductor chips and computer hardware. It reported below-par Q2 earnings, with EPS missing estimates by $0.41 and revenue coming in at $15.32 billion, below estimates by $2.60 billion. Shares are down 34.3% in the year to date, and have slumped 6.16% in the last month alone as of August 9.
However, the long-term bullish view on Intel Corporation (NASDAQ:INTC) is warranted by the fact that it stands as one of the biggest beneficiaries of President Biden's CHIPS Act, which is the US government's attempts to boost the local semiconductor industry, and would allow Intel to build manufacturing plants at subsidized rates through an investment tax credit. A $20 billion semiconductor manufacturing plant in Ohio is already under discussion, and Reuters recently reported that a $5 billion set up in Italy is also nearing approval. This is part of Intel's long-term strategy under CEO Pat Gelsinger to turnaround the company's fortunes after it had lost significant market share to rival Advanced Micro Devices (NASDAQ:AMD) in recent years.
Out of all the hedge funds tracked by Insider Monkey, 76 reported bullish bets on Intel Corporation (NASDAQ:INTC) shares at the end of Q1 2022, showing a positive trend from the preceding quarter where 72 hedge funds held positions in the company.
On August 1, Northland analyst Gus Richard kept an 'Outperform' rating and a $55 price target on Intel Corporation (NASDAQ:INTC) shares. The analyst assessed that Intel Corporation's (NASDAQ:INTC) valuation is now less than AMD, and he believes that Intel's manufacturing capability is strategically valuable to the U.S. Department of Defense and will “persevere in one form or another.” If INTC “continues to stumble,” Richard estimates the breakup value to be $235 billion or $57 per share, and thus sees “little downside risk and a lot of upside,” even if the company does not execute, given this breakup value and de-risked estimates, robust valuation support, and a 4% dividend yield.
Intel Corporation (NASDAQ:INTC) is a prominent stock on the radar of investors placing long-term bets, in addition to stocks such as AT&T Inc. (NYSE:T), The Walt Disney Company (NYSE:DIS), and Meta Platforms, Inc. (NASDAQ:FB).
Here is what Baron Fund, an investment management firm, had to say about Intel Corporation (NASDAQ:INTC) in its Q1 2022 investor letter:
“Intel’s (NASDAQ:INTC) capital spending process is guided by a process they appropriately named “copy exactly.” This means that they attempt to “copy exactly” what they have already built and attempt to improve tried and true processes iteratively.”
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Disclosure. None. 11 Best Falling Stocks To Buy Now is originally published on Insider Monkey.