3 Struggling Stocks Not Worth Buying on the Decline

Should you buy dip? It is a popular but potentially dangerous strategy, especially for less experienced investors. This is because a struggling stock that is nearing a 52-week low can drop further to new lows and continue to decline indefinitely.

So before you buy a stock that has fallen deeply in value, you should do your due diligence and have faith in its ability to bounce back. Otherwise, you might just be setting yourself up for losses as the stock may fall even further.

Three stocks that have fallen more than 30% in the past three months alone are Walgreens Boots Alliance (WBA 2.69%), Trump Media & Technology Group (DJT 0.48%)and Intel (INTC 2.19%). But despite their seemingly low valuations, these aren’t stocks you should rush to buy.

Walgreens Boots Alliance

Shares in drugstore retailer Walgreens Boots Alliance have tumbled nearly 40% over the past three months. Healthcare stocks have hit new lows this year as concerns grow about the safety of its dividend and business.

New CEO Tim Wentworth came on board less than a year ago to fix the struggling healthcare company, but it’s no easy task as Walgreens continues to struggle with profitability. In two of the last three quarters, it actually burned through cash just from its day-to-day operating activities. That’s even before factoring in its dividend payments, which it is still making after Wentworth cut its payout earlier this year, rather than suspending it outright — a move the company may need to they end up doing it.

Walgreens may look cheap, trading at just 6 times its trailing earnings. But this is what I would call a classic value trap. The business is on shaky ground right now, and that valuation could look expensive in a year or two if Walgreens’ financials deteriorate. Its low valuation might make it an interesting stock to watch, but without an exceptionally high risk tolerance, it won’t be a suitable investment option for most investors.

Trump Media & Technology Group

One stock that may be even riskier than Walgreens is Trump Media & Technology Group. That’s because the company generates minimal revenue, long-term profitability is a huge question mark, and it’s mostly just a highly volatile and risky meme stock to own. It has effectively become a way for speculators to bet on who will win the presidency later this year.

But there isn’t much case for investing in stocks beyond that. It has fallen by 56% in the last three months. This is largely a speculative purchase as its Truth Social platform does not generate much revenue. While Trump Media may be optimistic about its opportunities in the streaming industry, larger and more established media companies have struggled in this area.

Intel

Computer giant Intel is another struggling stock that doesn’t seem to be catching a break. The tech stock went over a cliff after reporting earnings earlier this month because its numbers were dire. Not only did the company report a significant net loss of $1.6 billion in the period ended June 29, but its sales were down year-on-year, and Intel announced it was suspending its dividend and looking to cut costs .

Investors have doubts about the company’s foundry business and Intel’s ability to be a top chip maker, and these latest results don’t inspire any confidence that it’s headed in the right direction. Intel stock is trading at a price-to-book multiple of less than 0.8 as it recently hit a new 52-week low, and could also look like a cheap buy.

But with an uncertain path ahead, investors should not assume the worst is behind the business. There are still plenty of risks for investors buying Intel stock. With no sign of improvement in the coming quarters, it wouldn’t be surprising to see its stock fall even less in the coming months.