Now is one of the best times to invest in underperforming stocks. The stock market is back to trading at an attractive discount as the global economy recovers from the COVID-19 pandemic.
Here is a list of some of the underperforming stocks you should consider adding to your portfolio.
Albemarle Corporation (NYSE: ALB)
Albemarle (ALB) is the world’s biggest lithium producer, putting it in a position to benefit from the rise of electric vehicle sales. BLS figures show that electric vehicle sales represented 0.17 of all vehicle sales in 2011. By 2022, the figure had reached 10%, up from around 4.6% in 2021.
Data from the IAEA states that there will be 14 million EV sales by the end of 2023, a 35% year-on-year increase. All of these cars require massive batteries, which all run on lithium. With that in mind, ALB stock is highly undervalued.
In its most recent earnings report, Albemarle reported a 60% rise in net sales. It also reported an adjusted diluted EPS of $7.33, representing a 112% increase. Despite these impressive figures, ALB stock is struggling. It has experienced an YTD drop of -35.37%. Stock analysts give an average price target of $251.24, which is much higher than its current price of $138.63 as of 11:34 AM EDT, October 23, 2023.
Anheuser-Busch Inbev SA (NYSE: BUD)
BUD stock has continued to fall and is down -11.24% YTD, following a disastrous Bud Light marketing campaign. Despite being one of the most underperforming stocks right now, the company has on the recovery path.
In its most recent fiscal Q2 2023 earnings report, the company reported that total revenue was up 7.2%. It also reported an underlying profit of $1452 million. It reported an EPS of $0.72, against an expected $0.69, a surprise of 3.81%. For HY 2023, the company reported a revenue increase of 10%.
The impressive figures have yet to reflect in the stock price, as media controversy continues to overshadow its solid figures. Analysts give it a one-year target estimate of $66.63, which is lower than its fair market estimate of $90. Given its current price of $52.90 as of 11:59 AM EDT, October 23, 2023, BUD stock has the potential for a huge upside.
Walt Disney Co (NYSE: DIS)
Historically, Disney has been a pioneer in the media industry. It has helped to take the global media industry to new heights. Despite this, the company’s stock is down -6.16% YTD. It follows the underperformance of its streaming service, Disney+. Additionally, the recent SAG-AFTRA strike may have had an impact on its performance.
Despite these issues, Disney’s focus is still on direct-to-consumer products. These products will be the long-term driver of growth in the media industry, and Disney is in the perfect position to lead the evolution. Additionally, ESPN is still the most dominant player in the sports television industry.
Stock analysts give DIS stock a one-year target estimate of $104.86 against the current price of $83.22 as of 12:19 PM EDT, October 23, 2023. That figure is still lower than the fair value estimate of $145.
Charles Schwab Corporation (NYSE: SCHW)
Charles Schwab provides a full range of financial services, including money management, banking, financial advisory, and securities services via its subsidiaries. The recent US banking turmoil has heavily affected the company’s stock, which is down -39.04% YTD.
However, various measures taken by federal agencies have helped to calm down the situation. SCHW stock price has stabilized at around $50.04 as of October 23, 2023. It is attributable to a slowdown in the rate of deposit flight from US banks.
The company has opted to prioritize the repayment of expensive loans from the Federal Home Loan Bank (FHLB) system. Once it completes repayments, it could mark a return to earnings growth, rewarding those who have stuck with SCHW stock. Analysts give SCHW stock a one-year target of $70.13, which is still lower than its fair value estimate of $80.
Norfolk Southern Corp (NYSE: NSC)
Norfolk Southern Corp is a company in the goods and materials transportation sector that has been operating since 1872. In 2022, NSC stock suffered a setback due to labor constraints and service problems. However, it has managed to bounce back due to its top-tier management. The company operates a precision-scheduled railroad operation that has made efficient use of cargo trains and labor.
NSC stock is currently trading at $199.42 as of 12:41 PM EDT, October 23, 2023, which is a -19.56% drop YTD. However, the analysts give it a one-year target of $234.70. As the economy recovers and the goods transit sector improves, NSC stock will no doubt roar to new highs in the long term.
Consider Adding These Stocks to Your Portfolio
The above underperforming stocks are down right now. However, they all stand on solid principles. As the macroeconomic factors improve, these stocks will undoubtedly rebound as well. Analysts view all of them as trading at a discount. Keep in mind that investing in any stock should be a well-thought-out decision based on your analysis.
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