Today, we’ll look at three long-term stocks down 15% or more that investors should consider buying while they are on sale.
With stocks ripping higher in 2023, it may feel as though you have missed the boat and the easy gains have already been made. Yet, stocks have continued to climb a wall of worry in the face of rising interest rates, a potential recession and contracting corporate profits. And they could continue to do so.
For instance, Goldman Sachs strategists say the S&P 500’s rally is likely to persist as laggards play catch up. And JPMorgan Chase is telling clients to expect the index to hit a new all-time high.
Still, there are some bargains to be had if you’re willing to do some digging, especially if you’re looking for cheap long-term stocks to buy.
ZIM Integrated Shipping Services (ZIM)
ZIM Integrated Shipping Services (NYSE:ZIM) is navigating troubled waters, with shares down 15% in the past three months and more than twice that much over the past six months.
The company’s Q1 earnings report certainly didn’t help improve investor sentiment. Revenue fell 63% year over year, while the company reported a loss of 50 cents per share, much bigger than the 18-cent loss analysts were expecting, leaving a bitter taste in investors’ mouths. However, one could argue that this situation offers a tantalizing opportunity for long-term investors willing to ride out the storm.
According to Grand View Research, the container shipping industry is forecast to expand at a compound annual growth rate (CAGR) of 12% through 2028. ZIM is the 10th largest container ship operator with about 2% of the global container ship fleet, meaning there is ample room for growth.
In June, ZIM announced it was expanding its partnership with cross-border trade financing platform 40Seas in an effort to provide its customers with more access to capital.
While ZIM is grappling with weak freight rates, it would be wise for long-term investors to keep an eye on this undervalued stock. Shares are trading at just 0.6 times earnings and 0.2 times sales, which is lower than 98.5% and 92% of its peers, respectively.
Walt Disney (DIS)
Investors looking for long-term stocks down 15% or more should consider Walt Disney (NYSE:DIS), which has fallen by that much in the past three months and is down 27% from its 2023 high.
This includes a nearly 9% single-day drop in early May after the company reported its fiscal second-quarter results. The sell-off appeared to be spurred by a decline in Disney+ streaming subscribers. Still, the company’s revenue and earnings were in line with expectations. Revenue increased 13% year over year to $21.8 billion, while net income surged 150% to $1.49 billion as losses in the streaming segment continued to narrow.
Disney’s improving margins signal increased operational efficiency, but the company continues to face a number of challenges, especially in its entertainment segments. These include fierce competition in the streaming wars and declining profits from ESPN. Moreover, the company’s latest studio releases have failed to live up to box-office expectations, with one analyst estimating Disney has lost nearly $9o0 million on its last eight movies combined, which include “Thor: Love and Thunder” and Little Mermaid.”
Yet, those on the hunt for bargain long-term stocks would be remiss to count Disney out. With Bob Iger at the helm once again, the House of Mouse is likely to regain its magic sooner rather than later. For instance, Iger is looking for a new strategic partner for ESPN and has been cutting costs, both through layoffs and reduced content costs.
While it may take some time, Disney should emerge leaner and even fundamentally stronger than it is now under Iger’s leadership. It remains one of the most powerful entertainment brands in the world and investors who stick around are likely to get their fairy tale ending.
Medical Properties Trust (MPW)
Medical Properties Trust (NYSE:MPW), a real estate investment trust (REIT) specializing in the healthcare sector, is down 22% over the past six months, presenting an opportunity for savvy investors looking for cheap long-term stocks to buy.
Medical Properties Trust announced first-quarter results on April 27 that were less than stellar with a 14.5% decline in revenue and a dramatic 95% drop in net income. This was due in part to the sale of a number of hospitals to CommonSpirit Health. But there was a silver lining, as the company’s cash was up 28% to $302.3 million.
Things could start looking up for the REIT. One of its tenants, Prospect Medical Holdings, successfully secured new financing worth $375 million, which could lead to more stable rental income for MPW. Further, the company took a prudent step by refraining from purchasing any new hospital real estate in the first quarter.
Remember that investing is about anticipation, not reaction. Medical Properties Trust presents a potentially lucrative opportunity for those willing to bet on its turnaround story. After all, when the tide is lowest, the most rewarding treasures come to light.
On the publication date, Faizan Farooque did not hold (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.
