While it’s become a popular theme to buy when others are fearful, it’s not necessarily the best approach to follow blindly. That goes for stocks at one-year lows. Yes, they could be discounted opportunities. However, when a publicly traded asset loses a significant amount of value, there’s usually a reason for it.
That said, by adopting a disciplined approach at the plate so to speak, contrarian investors may be able to extract significant upside rewards. Part of the appeal comes down to the underlying math. By scooping up shares that have been cheapened, a possibility exists that the assets in question could rise to their prior valuation. Theoretically, that gives such ideas a tall performance ceiling.
Also, it’s possible that because these enterprises have been beaten down so badly, the worst of the volatility could be baked in. From here on out, it could be a profitable ride. Of course, it’s also an incredibly risky course of action. Still, if you can handle the heat, below are intriguing stocks at one-year lows.
ConocoPhillips (COP)
Specializing in the oil and gas exploration and production segment of the energy value chain, ConocoPhillips (NYSE:COP) makes a great case for stocks at one-year lows. First, let’s get the technical stuff out of the way. In the past year, COP stock dropped just under 7%. It was performing decently. However, last week’s market rout did not sit well with the equity, causing a conspicuous decline.
Still, I’m inclined to bet on ConocoPhillips making a recovery because the exploration and production segment (also known as upstream) will likely become critical in the months and possibly years ahead. That’s due to geopolitical flashpoints potentially threatening global energy supply chains. Fundamentally, the democratic world is in dire need of reliable energy inventory. ConocoPhillips just might help.
Thanks to the recent fallout, COP stock is more attractively priced. Right now, shares trade hands at 2.29X trailing-year sales. In the first quarter of this year, the metric averaged 2.73X.
Lastly, analysts expect fiscal 2024 sales to hit $59.23 billion, up from last year’s print of $58.57 billion. While that’s very modest, the high-side estimate calls for $64.72 billion. That’s probably more realistic given the geopolitical situation.
MP Materials (MP)
Based in Las Vegas, Nevada, MP Materials (NYSE:MP) falls under the industrial metals and mining industry. Per its public profile, the company focuses on producing rare earth materials. Moving forward, the inventory and accessibility of rare earths could be a major flashpoint in its own right. Given the criticality of this sector toward modern technology, investors should keep a watch on MP stock.
Suffering a loss of more than 52% in the past year, MP is definitely one of the stocks at one-year lows. Now, I’m not a big fan of attempting to catch a falling knife: that might describe MP Materials based on its five-day loss of almost 19%. Still, I appreciate the relevance of its core business.
For full disclosure, MP stock isn’t exactly cheap. It trades hands at 11.17X trailing-year revenue. That’s above the prior year’s average of 10.53X. Even worse, analysts believe that by the end of this fiscal year, sales could drop to $189.61 million, down 25.2% from last year’s haul of $253.44 million.
However, fiscal 2025 could see a recovery to $392.49 million. That could make MP stock an intriguing wager.
STMicroelectronics (STM)
Operating in the semiconductor industry, STMicroelectronics (NYSE:STM) is both an enticing and risky idea among stocks at one-year lows. Primarily, the company specializes in microcontrollers. These circuits are integrated into multiple facets of everyday modern life. In particular, STMicroelectronics – often abbreviated as just ST – offers key solutions in the automotive space.
Unfortunately, despite seemingly being relevant, STM stock hasn’t performed well at all. Since the beginning of this year, shares slipped almost 38%. Over the past 52 weeks, they’re down 39%, making ST one of the candidates for stocks at one-year lows. Yes, one could make the argument that the valuation – a price-to-sales multiple of 2.44X – is relatively attractive.
Here’s the thing: analysts anticipate that sales in fiscal 2024 will land at $13.4 billion. That’s below last year’s tally of $17.29 billion. However, market experts also see fiscal 2025 as being part of a recovery track, with sales rising to $14.58 billion. The high-side estimate calls for $16.45 billion.
Fundamentally, microcontrollers are vital to the conveniences we all enjoy. Therefore, STM stock may deserve another look.
On the date of publication, Josh Enomoto 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.