Is the broad market at, or even near, a trade-worthy bottom? It’s hard to say. We’ve certainly seen support at the S&P 500’s 200-day moving average line, but the key indices have yet to push up and off of their long-term moving average lines in a way that rekindles the bigger uptrend.
In other words, the matter still hangs in the balance.
Regardless of where the overall market is in the bottoming process, there are some high-quality stocks that have been dragged lower with the broad tide, perhaps without deserving to take the punishment they did. Some of those names are at prices too good to pass up, even if they’re not necessarily at their ultimate low point just yet.
With that as the backdrop, if you can stomach the possibility of another bearish leg taking another swipe as some familiar names, these S&P 500 stocks are or near long-term lows and may be worth scooping up sooner or later. In no certain order…
S&P 500 Stocks to Buy: Acuity Brands (AYI)
It’s possible you’re using an Acuity Brands, Inc. (NYSE:AYI) product in your workplace, or maybe even your home, without even realizing it. The company makes light fixtures and the underlying technology needed to take advantage of the unique benefits of LED lighting. Juno, American Electric and Peerless are just a few of its brands, and it’s wading deeper into the Internet of Things market.
Granted, last quarter wasn’t a great one. Acuity fell short of its earnings estimates, posting a profit of $1.89 per share versus expectations of $2.11. What was lost in the dust-up, however, was that the top and bottom lines were both up year-over-year. Indeed, both have been growing for a long while now, and are expected to keep doing so for the foreseeable future.
The stock’s 26% YTD pullback says investors aren’t paying attention to the bigger picture.
S&P 500 Stocks to Buy: Whirlpool (WHR)
Whirlpool Corporation (NYSE:WHR) shareholders can’t get a break. Even when nearly every stock was roaring between late 2016 and early 2018, Whirlpool shares were lagging. And, with the broad tide giving way, WHR stock has been a horrible performer, reaching a two-year low this week.
Worse, Goldman Sachs is leaning more and more bearishly, downgrading the appliance maker from “neutral” to “sell” due to an increasingly fragmented market that saps the company’s pricing power.
In many ways though, Goldman’s newly-realized doubts may actually be a sign of capitulation. The competitive threat is now three years old, giving the company time to adjust. To that end, its Q4 revenue and operating profits were both up year-over-year, suggesting Whirlpool has turned the corner.
S&P 500 Stocks to Buy: Alliance Data Systems (ADS)
Alliance Data Systems Corporation (NYSE:ADS) isn’t exactly a household name. But, it’s possible you’re inside one of the company’s many ecosystems and simply don’t know it. If you’re an American Express, Pottery Barn or Walgreens customer (just to name a few), Alliance Data Systems is helping its client companies make more use of the data those outfits have about you.
It’s a great business to be in, despite the recent gaffe Facebook stumbled into by letting Cambridge Analytica get a little too close to its users. That embarrassment cast the whole business of data brokers in a less-than-flattering light … indirectly including Alliance Data Systems. ADS was already fighting a losing battle, but the knee-jerk worry drove the stock to new 52-week lows just this week.
The social networking scene isn’t quite the company’s milieu though, and it made a point of saying it doesn’t expect to materially impacted by the looming change in what’s a palatable use of your personal data.
S&P 500 Stocks to Buy: Newell Brands Inc (NYSE:NWL)
Those who know the company well will know the stock’s value has been cut in half in less than a year, in response to so-so results and the subsequent involvement of an activist investor — Starboard — that’s sure to shake things up one way or another.
It remains to be seen exactly how the brewing proxy battle is all going to pan out. Someone, somehow is going to light a fire under the company and its stock though; all the adverse impact of the turnaround battle seems to already be priced into shares.
S&P 500 Stocks to Buy: FMC (FMC)
On the good chance you don’t haven’t heard about this company, FMC Corp (NYSE:FMC) is a chemical company, supplying farm, factories and even consumers with the simple consumables they often take for granted.
It’s a hit-and-miss kind of business. Volatile commodity prices can make it difficult for FMC to source materials, but it can also set the stage for price wars waged by competitors. By and large though, the nuanced dynamics of the chemical business appear to be working for FMC more than they’re working against it. A recent preview of its first-quarter numbers suggested its per-share profits will roll in at the higher end of the previously guided range of $1.45 to $1.59.
The stock’s 20% slide since the end of last year indicates investors are skeptical, but priced at a forward-looking P/E of less than 13, FMC stock may well be worth the risk.
S&P 500 Stocks to Buy: General Electric (GE)
Not only was General Electric Company (NYSE:GE) the worst performer of the Dow Jones Industrial Average in 2017, and with a 25% loss year-to-date, it’s 2018’s biggest laggard as well. Perhaps worse, JPMorgan’s Stephen Tusa argues that GE stock still hasn’t fallen far enough, and remains the most expensive stock in the industrial sector.
It’s a backwards-looking analysis though. You own stocks for where they’re going rather than where they’ve been, and for all of General Electric’s woes, the company knows all too well that it has to fix them.
And, it’s doing so, even if that means taking the drastic measure of breaking the conglomerate up into multiple pieces.
S&P 500 Stocks to Buy: Cerner Corporation (CERN)
There’s no getting around the fact that this nation’s healthcare industry has become a mess. Buying and delivering it has become too expensive, and the sheer size and complexity of it all (insurance, primary care, secondary care, pharmacy, etc.) has created tremendous inefficiencies. It’s also proven dangerous.
Investors haven’t been kind to Cerner this year, dragging it 16% lower since the end of 2017 to new 52-week lows. But, that weakness hardly reflects the company’s results. Revenue was up 4% during the fourth quarter of last year, and grew 7% on a full-year basis. Cerner is doing all it’s supposed to be doing.
S&P 500 Stocks to Buy: Alaska Air Group, Inc. (NYSE:ALK)
Alaska Air Group, Inc. (NYSE:ALK) is another one of those companies that’s doing well, yet those results are being ignored by investors’ preconceptions. Namely, its fourth-quarter revenue was up 29% (thanks to acquisitions), and grew 34% for all of 2017. Income fell, largely thanks to growing fuel and labor costs. Both can be managed going forward though.
The kicker: Alaska Airlines was just named the top scorer in the yearly Airline Quality Ranking survey performed by Wichita State University and Embry-Riddle Aeronautical University. Clearly it’s doing something right.
That has not prevented the stock from falling nearly 40% since February of last year. At a trailing P/E of 7.2 and a forward-looking P/E of 8.3 though, investors are expecting an apocalypse that just isn’t going to happen.
S&P 500 Stocks to Buy: Fortune Brands Home & Security (FBHS)
In late January, it seemed Fortune Brands Home & Security Inc (NYSE:FBHS) could do no wrong. It was starting a fifth straight year of bullishness, moving deeper into record-high territory.
It stopped and turn on a dime though, and has fallen 20% from that peak.
Investors can’t say it was a failure to perform or a poor outlook that really prompted the selling though. Its fourth-quarter sales were up 6%, as they were for all of 2017. Earnings grew by double digits for both timeframes. Better still, Fortune Brands is looking for sales growth of 6% to 7% this year, with another year of double-digit earnings growth in the cards.
S&P 500 Stocks to Buy: Celgene (CELG)
Last but not least, down 40% since September’s high and still toying with new 52-week lows, put Celgene Corporation (NASDAQ:CELG) on your list of names that may have been beaten up more than they deserve to be.
You may know the company better than you realize. Celgene is the maker of oncology drug Revlimid, which generated $2.2 billion in revenue alone during the fourth quarter of 2017. Its portfolio also consists of Otezla and Abraxana, each of which have also achieved “blockbuster” status.
The bulk of the pullback since September of last year was in response to the FDA’s decision in September to suspend new enrollments in the testing of durvalumab as a therapy for blood cancers. That trouble was exacerbated in October when Celgene announced a Crohn’s disease drug trial was being cancelled due to ineffectiveness.
A week later, the company reported disappointing quarterly sales for Otezla, and lowered its overall profit outlook. The sellers, however, may have gotten a bit overzealous.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.