3 Struggling Stocks That Could Be Bargain Buys Right Now

This year has been tough for many stocks, as uncertainties related to tariffs and ongoing trade wars have raised concerns about the economy. Investors are worried that these issues might lead to a recession. Companies have begun to voice their worries about rising costs, causing speculation about a possible market sell-off.

However, for long-term investors, now could be a great opportunity to buy stocks that are currently undervalued. By investing in solid companies at lower prices, investors may be able to achieve impressive returns in the future.

Three companies that have faced stock declines this year yet still show promise for long-term growth are Target (down 16%), e.l.f. Beauty (down nearly 40%), and Best Buy (down 7%). Let’s explore what makes these companies potentially attractive investments right now.

1. Target

Target's stock has dropped 16% this year, mainly due to investor concerns regarding a struggling economy that could affect consumer spending. The company's reliance on discretionary purchases exposes it to future uncertainties. Recently, Target indicated that tariffs might force it to increase prices on some products, adding another layer of risk.

Despite these challenges, Target remains a stable investment option. The company consistently reports profits and is currently trading at a low valuation of just 13 times its trailing earnings, significantly below the average of over 23 for the S&P 500.

With its stock price near a five-year low and a dividend yield of 3.9%, Target can be an appealing choice for patient investors. As a Dividend King, it has increased its dividend payout for over 50 years, which suggests a commitment to returning value to shareholders. Long-term investors may find value in this retail stock.

2. e.l.f. Beauty

e.l.f. Beauty, which sources around 80% of its cosmetics from China, could feel the impact of tariffs more than some other companies. The CEO expressed relief when recent tariffs were set at only 10%, fearing they could have been higher. However, this vulnerability has contributed to nearly a 40% decline in its stock price in 2023.

Compounding the concern, e.l.f. recently adjusted its sales growth forecast for the current fiscal year, lowering expectations due to declining trends. It now anticipates sales growth of 27%-28%, down from the previous 28%-30% forecast.

Nonetheless, e.l.f. is set to generate $1.3 billion in sales this fiscal year, which is a substantial increase from the previous year's $1 billion. Although the stock trades at a high valuation of over 40 times trailing earnings, the forward price-to-earnings (P/E) ratio is more attractive at around 18, reflecting anticipated future performance. The growth potential still makes e.l.f. a stock worth considering.

3. Best Buy

Best Buy is another retailer facing challenges due to tariffs, as it imports a lot of products from China and Mexico. The company has also mentioned that it may need to increase prices, which could impact consumer buying behavior. This year, Best Buy's stock is down 7%, experiencing the mildest decline compared to others on this list.

However, investors could see further decline in the short term, as Best Buy has projected its comparable sales growth for this fiscal year to range between 0% and 2%, not accounting for the potential impact of tariffs. This suggests that the immediate future could be uncertain.

While waiting for a recovery in discretionary spending and improved economic conditions, investors should note that Best Buy's stock is trading at a forward P/E of less than 13, making it an attractive option for those willing to be patient. Additionally, with a dividend yield of 4.8%, this stock offers a compelling reason to hold onto it during this period of uncertainty.

Investments carry risks, and it's essential to do thorough research before making any financial decisions.

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