Most stocks are down on the year and the major United States indices are endanger of giving up the gains they achieved this past spring as we progress through the fourth quarter of 2023. With the exception of a handful of technology stocks tied to artificial intelligence and a couple of pharmaceutical companies that have developed weight loss medications, most equities are in the red for the year. This is no doubt frustrating for investors.
However, the continued downturn has created some attractive buy-the-dip opportunities. The stocks of many great companies are now available at fire sale prices and look dirt cheap at current valuations. Investors with a long time horizon would be smart to buy these securities before the market turns higher and we get into a new bull run. Here is undervalued and ready to rise stocks to watch in 2024.
Hershey Co. (HSY)
Once again chocolatier Hershey Co. (NYSE:HSY) issued strong financial results that beat Wall Street forecasts. Once again HSY stock is falling like a stone. Hershey’s share price has dropped 5% since the company issued third-quarter results that beat analyst estimates on the top and bottom lines. In the last six months, the candy maker’s stock has declined 33% and is now trading at a 52-week low. The continued decline has come despite Hershey reporting Q3 earnings per share of $2.60, which was up 20% from a year earlier and well above the $2.47 expected by analysts.
Revenue in Q3 totaled $3.03 billion, up 11% from a year ago and ahead of the $2.96 billion forecast on Wall Street. Why is HSY stock sliding lower? It could be that sugar prices are up 40% year to date. Furthermore, it could be that this year’s cocoa crop in Africa was wiped out by flooding, pushing prices of that key ingredient sharply higher as well. Moreover, it could be concerns about the new weight-loss drugs and their potential impacts on candy sales. Whatever the reason, HSY stock looks cheap right now trading at 20 times future earnings and at the same level it was at two years ago. Fundamentally, this stock is rock solid.
Walt Disney Co. (DIS)
If shares of the Walt Disney Co. (NYSE:DIS) get any cheaper, they’ll have to start giving the stock away with subscriptions to the Disney+ streaming service. Now trading at $80, DIS stock is down 24% throughout the last 12 months and down 30% through five years. Disney’s share price is currently sitting at the same level it was at nearly a decade ago. The stock has plunged 60% since hitting an all-time high in March 2021. This seems like a cruel fate for the world’s largest entertainment company whose properties include Star Wars, Marvel, Pixar animation, National Geographic, and ESPN. Of course, Disney also owns Mickey, Minnie and the gang.
CEO Bob Iger rode to the rescue late last year and hopes are high that he will return Disney to its former glory. However, other than cutting costs and laying off more than 7,000 employees, Iger has struggled to resolve several nagging problems at the House of Mouse. These include the sale of the company’s legacy TV stations that includes the ABC network, deciding the ultimate ownership of the Hulu streaming service that Disney currently shares with Comcast (NASDAQ:CMCSA) and the ongoing strike by Hollywood actors that has shut down film and television production worldwide.
Disney also continues to fend off activist investor Nelson Peltz, who is agitating for multiple seats on the entertainment company’s board of directors. In time, Iger and his leadership team should be able to right the ship and DIS stock will most likely react positively. Until then, Disney’s shares are available to buy for a cheap price.
Ford Motor Co. (F)
The United Auto Workers (UAW) strike might be over, but it definitely came at a price for the Ford Motor Co. (NYSE:F). In announcing its Q3 results, Ford stated that the six-week strike undertaken by the UAW cost it $1.3 billion. Ford said it lost production of about 80,000 vehicles due to the strike and added that restarting production now will be costly and difficult. The strike has created so much uncertainty that Ford pulled its forward guidance for the remainder of this year. The Detroit automaker also announced plans to delay about $12 billion in previously announced investments.
As one might expect, F stock has been punished due to the strike and the lingering impacts that it’s likely to have on Ford’s operations and earnings. Ford’s share price has declined 27% throughout the last 12 months. The stock is currently trading for less than $10, down 64% from more than $25 a share in January 2022. The new collective agreement with the UAW is expected to be a big pill for Ford to swallow given that it includes 25% pay increases, including an initial increase of 11%. Deutsche Bank (NYSE:DB) has calculated that the new labour deal, which runs more than four and a half years, will cost Ford $6.2 billion.
In time, Ford’s stock is sure to recover. For now, F stock looks dirt cheap trading at just six times future earning and offering a quarterly dividend payment that yields 6.14%.
On the date of publication, Joel Baglole held a long positions in HSY and DIS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
