April 10, 2021
5 minutes of reading
This story originally appeared on MarketBeat
When a stock is trading close to a 12-month low, it can be understood one of two ways. Either it deserves there and has more downsides, or it is oversold and has the fundamentals for making change.
With a holistic approach, we look at three mature, large-cap companies that are trading near their 52-week lows. There was a time throughout their trading history buy sauces turned out to be a good move – and in each case, the current setup doesn’t seem to make any difference.
Why does Merck stock fall?
Merck & Company (NYSE: MRK) are trading just 5% from a 52-week low of $ 71.72. Stocks jumped $ 20 from a March 2020 low to around $ 85 in early January just to fall back to a low of $ 70. How did you get there?
Let’s just say Merck has a lot on its plate these days. The pharmaceutical giant is in the process of reorganizing, including the reception of new CEO Robert Davis in June after Ken Frazier is retired who has been in leadership for the past 10 years.
Merck is also set to end sales of Organon women’s medical devices and biosets by the end of this quarter. The absence of this faster-growing segment can certainly affect the company’s overall growth and is a cause for market concern.
Both events have the potential to pull resources out of the way and can have a short-term impact on performance. Furthermore, whenever a company brings in a new CEO and reorganizes its organizational chart, it adds an element of uncertainty as to whether the moves will pay off. Some investors are impatient and want to turn to other stocks rather than waiting for the story to unfold.
The leadership change and Organon’s change are also distracting. But as these problems fade, Merck will emerge as a more focused business with solid long-term growth prospects stemming from a strong cancer portfolio. This includes the immunoscientific blockbuster Keytruda, which consulting firm GlobalData predicts will be the world’s best-selling drug by 2023.
Merck’s diabetes franchise along with the veterinary and vaccine businesses will also support long-term growth. Investors can see the forest from the trees that bought Merck here.
Is it a good time to buy Verizon stock?
Verizon Communications (NYSE: VZ) are trading about 9% higher than the 52-week low of $ 57. Shares came under pressure this week after T-Mobile launched a new 5G home internet service in 49 US states. The high-speed service will cost $ 60 a month and will help the company go head-to-head with Verizon and other competitors. Rest assured, as usual Verizon could soon launch a counterattack that will bring investors back.
Followed by the news that Verizon is recalling 2.5 million hotspot devices because of the potential fire risk associated with its lithium-ion batteries. The timing of the recall is unfortunate as it is these days how consumers in the country are counting on mobile hotspots.
So this isn’t Verizon’s best week, but the good news is that it will be over too. And finally, this price will be seen as a good opportunity to reach a leading telecom giant with huge subscriber base that will continue to generate strong revenue.
Later this month, Verizon will report its first quarter results. Analysts are expecting EPS at $ 1.28, which will be a record performance. This will help restore market confidence in the company and remind them of the growth opportunities ahead in 5G infrastructure. In the meantime, the investors have a chance to get some cheap, Verizon defenses and enjoy dividends of 4.4%.
Is the Clorox Pullback a buying opportunity?
Company Clorox (NYSE: CLXis also 10% lower from a 52-week low of $ 176.73. In retrospect, stocks are overdue for one pullback after going through a 9-month winning streak and hit a record high of nearly $ 240 by August 2020.
A worldwide team of cavalry people consuming the bacteria produced some astonishing results at Clorox during the pandemic. At some point, demand for bleach, disinfectants, and laundry detergents may decline and it looks like the retreat from peak sales is going well.
However, that does not mean that Clorox will not continue to deliver steady growth in the post-pandemic world as it has for decades. Consumers will continue to buy Clorox’s popular cleaning and non-cleaning brands like Liquid Plumber non-clog drain, Fresh Step kitty litter, Glad trash bag, Kingsford coal, Brita water filter – and so on. These types of clothing are unlikely to be suitable for the Hidden Valley farm.
Speaking of the downside, the 20% surplus pullback from the high seems like a great time to buy stock in Clorox. Sure, sales growth will likely continue to slow, but for defensive stocks, Clorox’s diversified portfolio of top consumer brands will leave investors ‘excited’. own it in times of market volatility.