The market may seem to be soaring at all-time highs, but beneath the surface lie stocks struggling to gain ground. While many companies flounder, a few are slipping under the radar, presenting a rare opportunity for shrewd investors. These undervalued gems, overshadowed by recent downtrends, are poised to shine once again and join the upward trajectory of the market. Let’s delve into the three most compelling S&P 500 stocks that merit attention in March 2024.
Humana (HUM)
Health insurance heavyweight Humana (NYSE:HUM) finds itself in a tight spot, with its stock plummeting by 26% since the start of the year. Yet, this decline has made it a tantalizing prospect for value investors, trading at just 17 times future earnings estimates and offering a quarterly dividend yield of 1.02%. As the stock continues its downward spiral, astute investors stand to benefit from seizing the opportunity at hand.
Humana’s recent setback stemmed from a dismal fourth-quarter performance in 2023, where the company unexpectedly posted a loss of 11 cents per share, far below Wall Street’s anticipated profit of 89 cents. The loss was primarily attributed to mounting Medicare Advantage medical costs and increased inpatient utilization rates. However, these short-term challenges are expected to abate, setting the stage for Humana’s resurgence.
Warner Bros. Discovery (WBD)
The saga of Warner Bros. Discovery (NASDAQ:WBD) unfolds as a tale of woe, with its shares nosediving by 28% this year, trading below $10 and down a staggering 65% over five years. Likened to a shipwreck, the company’s fortunes have been marred by lackluster earnings and an overwhelming debt burden, currently standing at a hefty $44.20 billion.
In the fourth quarter of 2023, Warner Bros. Discovery reported a loss of 16 cents per share, surpassing analyst expectations of a 7-cent loss. With revenue falling short at $10.28 billion and a 17% decline in U.S. studio revenue, the company faces an uphill battle. Despite this, Warner Bros. Discovery is not without its silver linings, boasting profitability in streaming services like Max, along with a rich portfolio of entertainment assets spanning iconic brands from Batman to CNN.
Tesla (TSLA)
The Rollercoaster Ride of Tesla (TSLA) Stock: Navigating the Twists and Turns
Challenges for Tesla
Electric vehicle maker Tesla (NASDAQ:TSLA) finds itself in the unenviable position of holding the title for the worst-performing stock in the S&P 500 index this year. Plunging by 35% since January, Tesla appears to be on a downward spiral, leaving investors wary of its current valuation. The company’s woes stem from lackluster financial performance in the fourth quarter of 2023, coupled with a bleak outlook for the upcoming year.
Analyst Downgrades
Recent weeks have seen a flurry of Wall Street analysts downgrading their ratings on Tesla stock, highlighting concerns over decelerating growth and dim prospects. Notably, Wells Fargo (NYSE:WFC) analysts dealt a significant blow by downgrading TSLA stock from “hold” to “sell” and slashing the price target from $200 to $125. In their stark assessment, the Wells Fargo team branded Tesla as a “growth company with no growth.”
Slumping Sales and Eroding Margins
Tesla’s woes seem justified as sales figures have dwindled across Europe, China, and North America over the past year. The company’s desperate measures, including multiple price cuts on its vehicles, have taken a toll on profit margins, painting a grim picture for investors. However, this is not unfamiliar territory for TSLA stock, known for its volatility.
Historical Context
Despite the current turbulence, Tesla has a history of bouncing back from challenging times. A prime example lies in the period from September 2022 to January 2023 when the stock plummeted by a staggering 63% only to surge by 125% shortly after. This rollercoaster journey underscores the unpredictable nature of Tesla’s stock performance and its resilience in the face of adversity.
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.
