Recent days have brought new highs to both the Dow Jones Industrial Average and the S&P 500. But not every leading stock is necessarily up. In fact, the tech-heavy Nasdaq 100 has not been able to go over the all-time high (ATH) it hit in April. So, those stocks that have come under pressure now offer investors better entry points. As such, today’s article will introduce seven beaten-down stocks to buy right now for a June rebound.
The soaring prices of the past year have brought high valuations to many businesses. Because of that, searching for lower-priced stocks has become a major challenge for value-conscious investors. Short-term volatility since the early days of the pandemic has also unnerved many retail investors.
However, the market always has solid and high-growth names that go down in value. In fact, as valuations have gotten loftier in recent weeks, fewer investors have become willing to chase the darlings of 2020. Yet, for most of these beaten-down stocks, future earnings estimates remain strong.
Thus, once the headwinds wane, they will likely catch up. So, long-term investors should do further research on these robust picks and possibly buy the dips. That said, let’s take a closer look at these companies whose recent lackluster price action may not necessarily reflect their true growth potential.
- Adobe (NASDAQ:ADBE)
- AstraZeneca (NASDAQ:AZN)
- Biogen (NASDAQ:BIIB)
- Domino’s Pizza (NYSE:DPZ)
- Illumina (NASDAQ:ILMN)
- O’Reilly Automotive (NASDAQ:ORLY)
- Verizon (NYSE:VZ)
Stocks to Buy Right Now: Adobe (ADBE)
52-week range: $385.84 – $536.88
Software giant Adobe is well known for its digital products and services. Its customers range from students to creative artists, small businesses, government agencies and many of the largest global brands. Founded in 1982, the company has more than 23,000 employees today.
In March, Adobe released first-quarter metrics. Revenue of $3.91 billion meant 26% year-over-year (YOY) growth. Non-GAAP net income was $1.52 billion. Additionally, non-GAAP diluted earnings per share (EPS) was $3.14, an increase of about 38% YOY. Cash flows from operations were at $1.77 billion. On the results, Adobe CEO Shantanu Narayen stated the following:
“[W]e are raising our annual targets based on the tremendous opportunity across our business and our continued confidence in our global execution […] Adobe’s Creative Cloud, Document Cloud and Experience Cloud have become mission critical to all customer segments—from students to individuals to large enterprises—across the
Year-to-date (YTD), ADBE stock is down about 1%. After seeing a 52-week high in September, the shares have given up some gains. However, the stock is still up 28% in the past year. Additionally, ADBE has a forward price-to-earnings (P/E) ratio and and price-to-sales (P/S) ratio of 42.47 and 15.63, respectively. Interested investors could regard the recent decline in price as a better opportunity to buy into this robust company.
52-week range: $46.48 – $64.94
Dividend yield: 3.35%
Next up on this list of stocks to buy right now is AstraZeneca, a leader in the pharmaceutical space. Currently, this company is probably most notable for its Covid-19 vaccine, which has been approved by many countries around the globe.
On top of its vaccine, though, AZN also possesses branded drugs across several major therapeutic classes, including respiratory, cardiovascular, immunology, cancer and more. Sales in the U.S. represent close to one third of its revenues. Additionally, analysts agree this pharma giant has a promising pipeline — one that will likely lead to several U.S. Food and Drug Administration (FDA) approvals in the near future.
AstraZeneca released Q1 results back on Apr. 30. For the quarter, total revenue increased by 15% to $7.32 billion. Profit after tax increased by 108% YOY to $1.56 billion (Page 19). The company also reported EPS of $1.19, doubling from 59 cents in the prior-year period. Plus, cash and equivalents came to $7.24 billion, compared to $2.98 billion in the prior-year period. On the results, CEO Pascal Soriot commented:
“We delivered solid progress in the first quarter of 2021 and continued to advance our portfolio of life-changing medicines […] New medicines contributed over half of revenue and all regions delivered encouraging growth. This performance ensured another quarter of strong revenue and earnings progression, continued profitability, and cash-flow generation.”
AZN stock is up 13% so far in 2021. However, the shares have trimmed off gains after seeing a record high back in July. Currently, the stock has forward P/E and P/S ratios standing at 15.05 and 4.8, respectively. Interested readers could consider any further decline below $55 as an opportunity to buy into this innovative pharma group.
Stocks to Buy Right Now: Biogen (BIIB)
52-week range: $223.25 – $363.92
This next stock to buy also comes from the biopharma industry. Biogen develops “therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic adjacencies.” The company is also working on research programs focused on a variety of conditions, from multiple sclerosis, dementia and Alzheimer’s to movement disorders, neurocognitive disorders and much more.
Biogen reported first-quarter results back on Apr. 22. For starters, the company’s revenue decreased 25% YOY to $2.69 billion. Additionally, net income came to $410 million, a decline of about 71% from the prior year. Diluted EPS of $2.69 also decreased approximately 67%, down from $8.08 in the year-ago quarter. Finally, free cash flow for the quarter was $676 million, down 49% from a year ago. That said, CEO Michel Vounatsos spoke positively about the results:
“Our first quarter 2021 results were consistent with our expectations across MS, SMA, and biosimilars despite increased competition […] We are pleased with our operational performance during the quarter, and we are increasing our earnings guidance for the full year.”
The decline in Biogen’s revenue and earnings was mainly due to loss of patent protection on its blockbuster drug Tecfidera. However, things may be looking up for the biopharma group, as it just received FDA approval for aducanumab, a therapy drug for Alzheimer’s disease.
For the past year, BIIB stock is down about 7% but its up about 17% YTD. The forward P/E and P/S ratios are 15.53 and 4.09 as well. Although this company’s recent results have been poor, most of the bad news is likely to have been factored into the current price of Biogen shares. Therefore, BIIB stock deserves a closer look.
Domino’s Pizza (DPZ)
52-week range: $319.71– $447.50
Dividend yield: 0.87%
If you enjoy pizza delivery then you are likely to have ordered from Domino’s Pizza during the lockdowns. Currently, this name is the largest pizza company worldwide based on sales. DPZ has over 17,000 stores in some 90 countries, depending largely on independent franchise owners.
Like some of the other stocks to buy right now on this list, DPZ announced its Q1 2021 financials at the end of April. For the quarter, revenue increased by nearly 13% YOY to $983.7 million. However, net income decreased by about 3% YOY to $117.8 million. On top of that, diluted EPS decreased slightly to $3. Finally, the company ended Q1 with $267.7 million in cash.
On the results, CEO Ritch Allison summed up with the following: “It was a strong first quarter for the Domino’s brand, with balanced growth across all areas of our global business.”
So far this year, DPZ stock is up roughly 14%, having hit a 52-week high in mid-May. Currently, the stock’s forward P/E and P/S ratios are 33.04 and 3.88, respectively. For this pick, investors could regard any further decline toward $400 as a possible entry point. Domino’s will likely create shareholder value for many quarters to come.
Stocks to Buy Right Now: Illumina (ILMN)
52-week range: $260.42 – $555.77
Illumina provides sequencing solutions for genetic analysis, as well as viral and cancer tumor screening tools. For one, this pick is attractive because analysts expect the DNA sequencing market to grow significantly in the coming years. A dominant player in its segments, Illumina will likely keep growing, both organically and through acquisitions.
This company announced first-quarter financial results on Apr. 27. The company reported revenue of $1.1 billion in Q1, “a 27% increase compared to the prior year period.” Moreover, adjusted net income increased by over 14% YOY to $278 million, or $1.89 per diluted share. Lastly, free cash flow in Q1 remained around the same level of the prior-year quarter at $240 million. On the results, CEO Francis deSouza remarked:
“Illumina achieved its first billion-dollar revenue quarter in company history and delivered a very strong start to 2021, exceeding our expectations […] We are seeing tremendous progress in clinical market access and reimbursement for genomic applications increasing access to genomic testing for patients worldwide.”
Today, shares of ILMN stock are up almost 17% YTD and saw a record high in February. Since then, profit-taking has kicked in. Now the stock has forward P/E and P/S ratios of 71.45 and 14.7. Buy-and-hold investors could consider this as one of the stocks to buy right now.
O’Reilly Automotive (ORLY)
52-week range: $401.65– $568.63
O’Reilly is one of the largest sellers of aftermarket automotive parts, tools and accessories. The company markets branded as well as own-label products, operating over 5,600 stores across the U.S. as well as a handful of locations in Mexico.
Back at the end of April, ORLY announced its first-quarter figures. For Q1, sales increased by roughly 25% YOY to $3.09 billion, up from $2.48 billion. Net income also rose by 67% YOY to about $502 million. Finally, diluted EPS for Q1 increased 78% YOY to $7.06. Looking forward, CEO Greg Johnson commented the following:
“[W]e are raising our full-year comparable store sales guidance to a range of positive 1% to 3% from our previous range of down 2% to flat. We also are increasing our full-year diluted earnings per share guidance to a range of $24.75 to $24.95, which represents an increase of $2.05 at the midpoint from our previously provided guidance.”
So far, ORLY stock has returned about 15% in 2021, reaching an ATH in May. Since then, though, shareholders have decided to lock in some of the recent gains. Currently, its forward P/E and P/S ratios stand at 20.59 and 3.04. When it comes to this pick of the stocks to buy right now, potential investors could consider investing around the $520 mark.
Stocks to Buy Right Now: Verizon (VZ)
52-week range: $52.85 – $61.95
Dividend yield: 4.38%
Last up on this list of stocks to buy right now, Verizon is one of the leading communications groups stateside. This company offers wireless and fixed-line telecom services for both homes and businesses. It has also been building a next-generation 5G network across the country. Analysts expect 5G to provide strong momentum for growth.
Verizon reported strong Q1 results on Apr. 21, “highlighted by growth in wireless service revenue” and increased cash flow. For starters, total consolidated operating revenue came to $32.9 billion, up 4% from the prior year. Net income was also $5.4 billion, an increase of over 25%. Additionally, management reported $1.27 in EPS, compared with $1 a year ago. Lastly, free cash flow of $5.2 billion was a significant increase from $3.6 billion in the previous year.
On the results, CEO Hans Vestberg noted the following: “Verizon is off to an excellent start in 2021 as we met the challenge of intense competition in the first quarter by achieving revenue growth across our three business segments.”
Currently, VZ stock is down 3% YTD but relatively flat for the past 12 months. Many long-term shareholders like this stock for its juicy dividends. In fact, Verizon has raised dividend payments back-to-back for 14 years. The stock’s forward P/E and P/S ratios are 11.25 and 1.77, respectively. Long-term investors could consider buying VZ shares around these levels.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.