Following last year’s big rally, the stock market is off to a slow start in 2024. After two weeks the S&P 500 index is essentially flat. That’s not enough time to make a trend and many stocks have still been sitting on large gains for the past 12 months.
But not all stocks enjoyed the bullish run-up. Instead, they missed out on the market rally that enriched so many. Today they continue to fall. A number of them just hit new 52-week lows. Yet that’s okay. Buying good companies at great prices is how you create exceptional wealth. It’s the embodiment of buy low, sell high.
Of course, don’t ever buy a stock just because it’s down. Sometimes a stock is cheap for a reason. There is something wrong with the business that warrants the market selling it off. Below are three stocks at a 52-week low, so let’s dive in and see if they are diamonds in the rough or just rough.
AMC Entertainment (AMC)
Movie theater operator AMC Entertainment (NYSE:AMC) just hit a new low of $4.56 per share, putting it 90% below where it stood one year ago. As the world’s largest theater operator, it was battered by the pandemic that closed theaters for months on end. While the reopening economy represented an opportunity for renewed growth, the movie-going public hasn’t returned. Theaters sold 851 million tickets last year, 20% above 2022 but still 30% below pre-pandemic levels. And despite ticket prices being 12% higher than in 2019, inflation-adjusted box office receipts are also down 30%.
AMC did enjoy a few big hits last year with Barbie and Oppenheimer, the industry’s biggest bashes. The Taylor Swift concert tour that was exclusively broadcast in AMC theaters was also massive. AMC set a single-day domestic record with $26 million worth of tickets sold in less than 24 hours.
Unfortunately, that’s not enough to keep AMC going. Movie studios are releasing fewer films. The six major studios released 12% fewer movies in 2023 while the others released a whopping 60% less. And one-time, sure-fire winner Disney (NYSE:DIS) now routinely produces box office bombs.
AMC also damaged its relationship with investors. Whether it was because of its preferred stock rug pull, massive stock sales, reverse stock split, or buying a defunct gold miner, shareholders have little reason to trust management. AMC Entertainment stock sits at an all-time low and its business is in decline. This isn’t some hidden gem, just fool’s gold. Investors should avoid it at all costs.
Lucid Group (LCID)
Luxury electric vehicle (EV) maker Lucid Group (NASDAQ:LCID) is another stock wearing thin its welcome with shareholders. Shares just hit a new all-time low of $2.97 per share but investors are used to it. The stock has been on a long, steady decline for over a year as missed deadlines and production numbers build up foreboding that Lucid will never match its hype.
The EV stock suffers from an inconvenient slowdown in EV car demand just as it plans to ramp up production. A record 1.2 million EVs were sold in the U.S. last year with Q4 sales up 40% year over year but the rate of growth is slowing. A cash-strapped consumer also isn’t in a position to buy a luxury EV starting at just under $80,000. Lucid’s prices only go up from there.
The better option for it is the Saudi Arabian market where the government is a major backer of the company. It wants to diversify the country away from oil and is making a big bet on EVs. The government invested heavily in Lucid and this is the only reason the carmaker remains afloat.
Yet you can’t completely rule out LCID stock. The Saudis committed to buying 100,000 Lucid EVs over the next decade. They’ve also built numerous assembly plants to grow a skilled labor force. Lucid builds cars in Arizona and ships them overseas for reassembly in the factories. Speculation is the Saudis will buy out the company rather than let the EV maker go under. That’s not a reason to buy shares but Lucid Group may not be a complete bust.
Novavax (NVAX)
Biotech Novavax (NASDAQ:NVAX) went from zero to hero because of its Covid-19 shot. The therapeutic, though, was commercialized late in the game. That means it missed out on the massive profits Pfizer (NYSE:PFE) and Moderna(NASDAQ:MRNA) made on their Covid shots. Now by its own admission Novavax’s future is in doubt.
The biotech issued a going concern notice last year. It says its ability to operate is dependent upon Covid sales and those are increasingly a hard sell. Novavax forecasts revenue will fall from $2 billion in 2022 to at best $1.1 billion when it finally releases Q4 earnings next month.
It also needs to keep hitting regulatory milestones. For example, the drugmaker had to deliver to Canada an updated Covid shot by the end of last year or return the $174 million it received from an advance purchase agreement. It just made it under the wire, delivering the new doses on Dec. 19. The stock trades at $4.58 per share, one of its lowest levels ever.
Novavax’s pipeline doesn’t inspire confidence either. Last May it announced a restructuring that reduces spending on its new drug pipeline. Its biggest hope is a combined Covid/influenza shot. With the U.S. Centers for Disease Control recommending regular shots for both, this combined dose could be a hit if approved.
Although NVAX stock is at distressed levels I wouldn’t back up the truck. Maybe a small bet is reserved for the riskiest part of your portfolio but don’t overextend yourself buying shares.
On the date of publication, Rich Duprey did not hold (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.
