The S&P 500 had another forgettable week as it remains in bear market territory. The Federal Reserve raised interest rates by three-quarters of a percentage point recently. As inflation rates continue to spring forward, there will likely be more fiscal tightening. Hence, it offers plenty of opportunities for investors to scoop up oversold stocks to buy that offer incredible long-term value.
Growth stocks, particularly, are sensitive to rising interest rates and have been hit remarkably hard. Moreover, the declines haven’t been limited to stocks only, as the crypto market has also been pulverized since the start of the year. A wide variety of stocks across multiple sectors are now trading near multi-year lows and present an excellent opportunity for investors to add them to their portfolios.
Here are seven oversold stocks to buy that could offer a lot to investors over the long term.
|BABA||Alibaba Group Holding Limited||$112.11|
|CAH||Cardinal Health, Inc.||$53.02|
Oversold Stocks to Buy: Etsy (ETSY)
Etsy (NASDAQ:ETSY) is a leading online marketplace that enables businesses and sellers to set up a digital storefront to sell handmade, customizable products. The business captured a truck-load of new shoppers during the pandemic years, but its revenue metrics have slowed down considerably over the past few quarters. Consequently, its stock has nosedived over 50% of its all-time highs.
Investors are missing the trick with Etsy, which still has a massive growth runway ahead. During the first quarter, the average frequency of purchases per repeat buyer increased by 15.55% compared to the same quarter in 2019. Moreover, management also talked about how 50% of its active buyers purchase only once a year. Additionally, its penetration rate remains below the 50% mark across seven main markets. Also, its transaction fee has risen by 1.5%, which could significantly add to revenues and profits for the enterprise.
There’s a massive untapped opportunity with the company, which investors need to consider seriously.
Fiserv Inc (FISV)
Fiserv (NASDAQ:FISV) is one of the top legacy financial players that have established itself among the largest payment processors, with billions of transactions completed annually. It’s performed impressively for the past five years, with its top and bottom lines growing more than 30% on average.
Its claim to fame is its merchant acceptance platforms in Carat and Clover. Clover has become one the most popular point of sale solutions, offering several modules for each merchant and multiple distribution channels that set it apart from its competition. Both platforms have experienced rapid growth in recent years, and the market could grow to a whopping $10 billion by 2025. That represents a massive 11.5% cumulative growth rate from 2021 to 2025.
Cleveland-Cliffs (NYSE:CLF) has become one of the juggernauts in flat-rolled steel production in the North American region. It’s coming off a sizzling year for the business, generating a record $20 billion in sales and a 365% increase in free cash flows.
Many of its peers struggle with supply-chain troubles due to the Russia/Ukraine conflict. However, CLF benefits from being a vertically integrated firm with stable domestic operations.
Though results aren’t going to be as lofty as 2021, near-term demand remains solid. Future demand is linked to the expansion of the electric vehicle and renewable energy businesses, which are a couple of sectors expected to grow at a staggering pace.
Oversold Stocks to Buy: Exelon (EXC)
Exelon (NASDAQ:EXC) is a utility giant that’s focused on the generation and delivery of energy. Its energy distribution is highly diversified, including a combination of electric distribution, electric transmission, and gas delivery. The company has significantly lowered its risk by having various transmission and distribution types. Moreover, it is undertaking several corporate transactions to boost its margins and further diversify its revenue streams.
The next few years will likely deliver strong returns to shareholders but might require a lot of patience. Its management is investing heavily in driving the next growth phase for the business and expects an 8.1% growth until 2025. The worldwide utility market is likely to grow at a compound annual growth rate of 7% through 2025, pointing to an incredible outlook ahead.
Controversies have marred Chinese tech giant Alibaba (NYSE:BABA) over the past couple of years, which have weighed down its stock. Nevertheless, it continues to post strong operating results in its core domestic e-commerce segment and cloud business. Moreover, its free cash flows have been rising at a breathtaking pace, growing from $6.58 per share in 2019 to $9.11 per share last year.
Alibaba’s Tmall and Taobao have collected a substantial amount of data from their active user base on which machine learning feeds. Therefore, despite the competition, growth rates from its domestic e-commerce business remain impressive.
As China’s middle class and GDP grow, BABA’s results will continue to sway its investors. Moreover, its cloud business continues to experience robust demand across retail, financial, and telecommunications sectors and recently turned a profit.
Cardinal Health (CAH)
Healthcare company Cardinal Health (NYSE:CAH) is one of the top pharma and lab equipment providers worldwide, acting as a middle man between manufacturers and patients. It currently serves over 80% of U.S. hospitals, establishing it as one of the giants in the pharma distribution business. It generated upwards of $162 billion in sales last year, a 51% improvement from roughly a decade ago in 2012.
One of the great things about Cardinal Health is its focus on shareholder rewards. It boasts a spectacular dividend profile, with a 3.9% yield and a 41% payout ratio, offering 17-plus years of growth. Moreover, its payouts consume less than 50% of its cash flows.
Oversold Stocks to Buy: Pinterest (PINS)
Social media giant Pinterest (NYSE:PINS) benefited immensely from the massive influx of users during the pandemic years. However, in the past few quarters, it’s been on a negative streak as far as active users are concerned. It did snap the streak in the first quarter, but the market must reset its expectations around the Pinterest platform.
Pinterest boasts a colossal user base that will grow at a healthy pace with the management’s efforts to drive more engagement. For instance, its management recently allowed users to post short videos and Idea Pins, a feature similar to Instagram stories.
Additionally, to drive e-commerce growth, it is building a “social shopping” ecosystem that includes an innovative checkout solution that will allow users to stay on the platform while making a purchase. Results are likely to stabilize during the second half of 2022, and these engagement measures could pay many dividends.
On the date of publication, Muslim Farooque 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