After the stock market’s dismal performance in 2022, investors are savoring this year’s rally. The Nasdaq Composite Index surged 33% higher in the first half of the year, though the growth-oriented index seems to have stalled out since.
While both the S&P 500 and Dow Jones Industrial Average remain in positive territory for July and August, the Nasdaq Composite is down over 1%.
While that still places it well above the performance of its brethren for the year, the index remains almost 15% below the record high hit in November 2021. Sitting that far down means it is in a correction. It also means there are value stocks to buy on the dip.
The following three stocks are an unmatched opportunity to pick up good companies at an attractive price.
Walgreens Boots Alliance (WBA)
Struggling pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA) is targeting $4.1 billion in annual cost savings by the end of fiscal 2024, or double its 2022 effort. Even so, it remains very profitable on an adjusted basis. It also pays a dividend yielding 6.6% annually.
Walgreens paid its first dividend back in the ’70s and started raising the payout three years later. It hasn’t stopped. That puts it on track to become a Dividend King — a stock that increases its dividend for 50 years or more.
Walgreens is also expanding its focus beyond its pharmacies. In 2021, Walgreens invested $5.2 billion into VillageMD to become the majority owner of the primary care practice. The investment took Walgreens’ stake from 30% to 63%. It intends to have 1,000 locations open by 2027.
VillageMD acquired Summit Health-CityMD last year, further expanding Walgreen’s reach into primary, specialty and urgent care. The move is a bid to gain a greater healthcare services market share.
Walgreens Boots Alliance stock is down 23% this year but trades at a fraction of sales and just eight times earnings. There’s rarely ever been a time when Walgreens was such a cheap value stock.
PayPal (PYPL)
Fintech giant PayPal (NASDAQ:PYPL) is another beaten-down stock in the midst of a turnaround. Its shares are off 20% this year but 40% over the last 12 months. The decline means it’s trading at just 11 times next year’s earnings estimates.
Part of PayPal’s problems is the increased competition in payments. The fintech is no longer the only alternative at checkout. Apple (NASDAQ:AAPL) Pay and others are now giving consumers options.
Despite beating analyst expectations on the top and bottom line in the second quarter, PayPal reported its number of active accounts fell slightly from the previous quarter.
PayPal, though, still looks poised to regain its momentum. It might not be immediate but within the next quarter or two.
First, it just got a new chief executive officer (CEO). Alex Chriss came to the payments company from Intuit (NASDAQ:INTU). A fresh set of eyes could help rejuvenate the business and thwart Apple’s encroachment. Also, the better-than-forecast results show consumer spending is rising. Total payment volume jumped 10% last quarter. PayPal is often seen as a barometer of the direction the economy is heading. Confident consumers benefit from PayPal’s transaction-driven bottom line.
Qualcomm (QCOM)
Smartphone chipmaker Qualcomm (NASDAQ:QCOM) is suffering from a crisis of confidence. The market is worried the smartphone market is saturated, and it will take some time to work off the overhang.
The market analysts at Omdia said global smartphone shipments fell 10% in the second quarter. All major manufacturers dropped compared to a year ago and the previous quarter. That marks the eighth consecutive quarter of year-over-year declines.
That’s a problem for Qualcomm. Apple and Samsung each account for more than 10% of Qualcomm’s revenue.
The industry concentration didn’t help its performance. The chipmaker’s fiscal third-quarter earnings report showed the effects. Revenue was down 23% for the period while profits were cut in half. So, what makes it a buy now?
The smartphone industry, while not exactly cyclical, goes through booms and busts. That said, the market isn’t collapsing. People will still want to upgrade their smartphones. Investors will just need a bit of patience.
Qualcomm is also branching out into the automotive sector and artificial intelligence. They’re still small businesses right now but are growing fast for Qualcomm.
President and CEO Cristiano Amon told investors, “on-device AI has the potential to drive an inflection point across all our products.” The automotive unit is also enjoying 11 straight quarters of year-over-year double-digit growth.
Qualcomm stock is down 25% over the last 12 months and should be seen as a value stock you will regret not buying on the dip.
On the date of publication, Rich Duprey held a long position in WBA stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
