Despite the market being near all-time highs, there are plenty of stocks that are in the red for the year. Many familiar names are not shared at the current rally, and they have seen their share price slump in recent months while the rest of the market ascends to new heights. Poor earnings are the main reason why most stocks have underperformed. For investors, the declines are starting to present some potential buying opportunities as some beaten-down securities become so cheap they’re starting to look undervalued at current levels. People willing to be patient and look past short-term problems could be rewarded in time as these stocks eventually recover and join the market rally. Here are the three most undervalued S&P 500 stocks to buy in March 2024.
Humana (HUM)
Healthcare insurance provider Humana (NYSE:HUM) has seen its share price fall 26% year to date. The stock of the fourth largest health insurance provider in America is starting to look affordable if not downright cheap trading at 17 times future earnings estimates and with a quarterly dividend yield of 1.02%. HUM stock might have further to fall before it bottoms and investors would be smart to buy the shares all the way down.
Humana’s stock collapsed after the company reported a surprise loss for the fourth quarter of 2023 and issued weak guidance for this year. For Q4 2023, Humana announced a loss of 11 cents a share. Wall Street had expected a profit of 89 cents. The loss was blamed on an increase in Medicare Advantage medical costs, as well as higher inpatient utilization rates. Long-term, these issues should be resolved. But in the short term, they’re dragging down HUM stock.
Warner Bros. Discovery (WBD)
The stock of Warner Bros. Discovery (NASDAQ:WBD) has been a train wreck. The entertainment giant’s share price is down 28% this year and is now trading for less than $10. Through five years, WBD stock has fallen 65%. Disappointing earnings have played a big part in the stock’s decline. However, a big issue is also the company’s crushing debt load, which currently stands at $44.20 billion.
Warner Bros. Discovery announced a loss of 16 cents for Q4 2023. That was more than double the loss of 7 cents expected among analysts. Revenue of $10.28 billion also missed forecasts, and U.S. studio revenue declined 17% year-over-year to $3.17 billion in the quarter. While the company paid down $5.4 billion of debt throughout last year, it still has more than $40 billion of debt on its books.
On a positive note, Warner Bros. Discovery is profitable in streaming with its Max service, and it has numerous entertainment properties, brands and specialty channels ranging from Batman and Harry Potter to CNN and the Food Network.
Tesla (TSLA)
Electric vehicle maker Tesla (NASDAQ:TSLA) has the distinction of being the worst-performing stock in the benchmark S&P 500 index this year. Down 35% since the start of January, the stock continues to slide lower, making it look increasingly undervalued. The decline comes after the company issued poor financial results for the fourth quarter of 2023 and gave a downbeat forecast for the year ahead.
In recent weeks, several Wall Street analysts have downgraded their ratings on the stock, citing slowing growth and a poor outlook. Most recently, analysts at Wells Fargo (NYSE:WFC) downgraded TSLA stock to “sell” from “hold” and lowered its price target to $125 from $200. In their downgrade, the Wells Fargo analysts called Tesla a “growth company with no growth.”
Much of the criticism appears warranted given that Tesla’s sales have slumped in Europe and China over the past 12 months, while its North American sales have decreased. The company has cut prices on its vehicles several times, eroding profit margins in the process. However, TSLA stock has been here before and always comes roaring back. Between September 2022 and January 2023, the share price fell 63% before rising 125%.
On the date of publication, Joel Baglole 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.
