It may seem risky to look for blue-chip stocks at a 52-week low. After all, most blue chips are renowned for their ability to trade within a stable range and deliver growth. Thus, looking for ones currently performing terribly might not make sense at first glance. However, this is where Warren Buffett’s ideology of “being greedy when others are fearful” comes into play.
That’s because the more a stock is down, the more upside potential it has for investors once it starts trending back up. Buffett made billions for Berkshire Hathaway (NYSE:BRK-A, BRK-B) applying this logic to his holdings in Bank of America (NYSE:BAC) after the 2008 financial crisis slashed its stock value.
Moreover, 52-week lows for a stock can be a fantastic point of entry for a new addition to an investor’s portfolio or a good opportunity to double down in an existing position. This helps lower the average price paid per share, ultimately strengthening long-term returns. As such, here are three blue-chip stocks at a 52-week low to consider.
Brown-Forman (BF-A, BF-B)
Already on a steady downtrend for the year, Brown-Forman (NYSE:BF-A, BF-B) hit a new 52-week low recently as a result of continued investor fear. It appears that many analysts are expecting the stock to fall even further after its next quarterly earnings report on June 6.
The company, which represents a vast conglomerate of alcoholic beverage brands saw its Jack Daniel’s sales dip 6% in its Q3 2024 report. This pushed the stock off the cliff and it has been tumbling down since. This trend is likely to continue up until the June 6 earnings call as it seems to still be finding a new price floor.
So what should investors do? It depends on how much risk they can stomach. Investors who want the absolute best price should wait right up until the earnings call to buy and then one of two things will happen. Either Brown-Forman’s year-over-year sales will tick back up, or another quarter of revenue loss could push the stock further down. However, in either case, the stock will eventually come back up as the business shifts to marketing new drinks to consumer’s changing palate for alcohol.
Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb (NYSE:BMY) began reeling after reporting a quarterly earnings loss about a month ago. Moreover, investor fears regarding the company’s close relationship with WICEO, a Chinese bioresearch group, have been cause for sell recommendations. However, the stock’s best days are likely still ahead of it, as BMY consistently explores new ways to treat cancer and expand the reach of its drugs.
An instance of this approach is BMY’s PD-1/LAG-3 combo drug Opdualag and the CTLA4 inhibitor Yervoy being used in advanced melanoma clinical trials. This three-drug combination including one of BMY’s proprietary technologies resulted in tumor shrinkage for 27 of 46 first-line melanoma patients.
Furthermore, the company has announced a new plan to make its drugs accessible to 200,000 new patients in low and middle-income countries by 2033 via better pricing through access plans. These moves underscore BMY’s commitment to improving its revenue prospects and patient outcomes, making it one of the better blue-chip stocks at a 52-week low to consider.
Nike (NKE)
It has not been a good year so far for Nike (NYSE:NKE) and its shareholders. The company has struggled in an ever-competitive market to define why its shoes should cost as much as they do. Alongside this, major competitors like On Holding (NYSE:ONON) and Deckers Outdoor (NYSE:DECK) have been steadily stealing market share away from Nike in the running shoe sector.
Yet, Nike remains a cultural icon in more ways than one. First, its reach into the professional sports world is unmatched. From endorsed athletes to whole national sports teams, the easily recognizable swoosh is still everywhere. For example, Nike is the most represented brand in this year’s European Football Championship with nine teams wearing its kit. Second, it dominates the sneaker resale market with no real competitor in sight.
While the stock is still finding its footing, Nike’s long-term goals of reducing management bloat and improving cost efficiency are likely to pay off so long as product quality doesn’t decrease. These factors make a strong case for why investors might want to consider a heavily discounted entry into Nike.
On the date of publication, Viktor Zarev 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.
