2 Magnificent Stocks to Buy That Are Near 52-Week Lows

Investor sentiment has fallen more than the fair share of stocks over the past few years, even as the bull market has sent the share prices of top companies across several industries skyrocketing. Ultimately, when looking at stocks to invest in for the long term, the stock price only tells you what the market is valuing the company at at that particular time.

Stock prices can go up or down for good reasons, but it’s important to look at the factors behind those moves and the underlying business of the stock. This allows you to determine if the business looks like a quality addition to your portfolio over the long term and if it is trading at a price you are willing to pay.

On that note, if you’re looking for two top stocks that are trading right now, here are some names that are trading pretty close to their 52-week lows that you might want to consider for your portfolio.

1. CVS Health

CVS Health (NYSE: CVS) has been hammered by the market of late, with shares not only hitting 52-week lows, but also down about 30% since the start of 2024. There are numerous factors behind this decline. CVS has faced slowing growth recently, particularly due to higher-than-usual patient utilization rates for the company’s Medicare business, which inevitably cuts into profits.

CVS has been forced to cut its financial guidance several times recently, another factor that has prompted some investors to sell shares. That said, the company continues to be profitable, with revenue growth and a strong cash position. In the second quarter of 2024, earnings fell year over year, but CVS still reported operating income of $3.1 billion and net income of $1.8 billion.

Revenue for the three-month period was $91.2 billion, up 2.3 percent from a year ago. The company also generated operating cash flow of under $8 billion in the first half of 2024.

Potential shareholders may be most interested in CVS for its dividend, which the company has an established track record of paying and collecting in a wide range of environments. The stock is up about 33% in value over the past five years alone, while the stock’s lackluster performance of late has pushed that yield to a juicy 4.6%. CVS currently boasts a payout ratio of about 45% of earnings, with a cash position of about $16 billion at the end.

Healthcare costs have been on the rise in recent years, and phenomena such as the rise in Medicare Advantage enrollment can undoubtedly be traced to delays in these trends due to the pandemic. While these are hurdles CVS will have to overcome, it has the business to do so for the long term. The company remains one of the nation’s largest pharmacy benefit managers, with a diversified business that includes its namesake pharmacy chain and a growing cohort of virtual care services.

The story continues

CVS also owns Aetna, the third largest US health insurance company by market share. And while financial growth has slowed, CVS is still profitable and cash flow positive. The company’s market leader, core business and dividend may all be reasons to consider a position in the healthcare stock.

2. Pinterest

Pinterest (NYSE: PIN) it was a dear pandemic, but the growth stock has declined considerably since then. While the stock is trading up about 17% from a year ago, the stock is down about 12% since the start of 2024 and only about $8 above its 52-week low.

Just because a stock is trading up or down doesn’t mean you should buy, but the Pinterest platform still has a lot of potential to offer consumers and advertisers alike. The company makes money by selling advertising space to companies in a wide range of industries, from beauty brands to home furnishings companies to clothing retailers.

Pinterest offers its users free inspiration in a virtually endless range of topics through images and videos. Those images and videos are often advertisements that lead users to a specific product or service that they can choose to purchase. While consumer spending has evolved since the pandemic surge, and advertising spending has contracted amid the economic environment, the broader outlook for these markets remains favorable.

Looking to the second quarter of 2024, revenue rose 21% year over year to $854 million. Pinterest now has 522 million monthly active users, up 12% year-over-year. The company also generated global average revenue per user (ARPU) of $1.64 in the three-month period, up 8% year-over-year.

Pinterest’s ARPU grew 16% in the US/Canada and 14% in Europe compared to a year ago. In terms of profitability, the platform generated net income of $9 million in the second quarter of 2024, compared to a net loss of $35 million a year ago. The company ended the period with about $1.4 billion in cash.

Pinterest has faced headwinds in its target markets from both consumers and advertisers, and growth has inevitably slowed since the peak of the pandemic. However, user growth is growing again, revenue is steadily increasing, and the company is working to be consistently profitable. Now could be an opportunity to buy this stock at a discounted valuation for its long-term potential.

Should you invest $1,000 in CVS Health right now?

Before buying shares in CVS Health, consider the following:

The Motley Fool Stock Advisor the analyst team has just identified what they think they are 10 best stocks for investors to buy now … and CVS Health was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $731,449!*

Stock advisor provides investors with an easy-to-follow blueprint for success, including portfolio construction guidance, regular updates from analysts, and two new stock picks every month. The Stock advisor the service has more than four times return of the S&P 500 since 2002*.

See the 10 stocks »

*The stock advisor returns starting August 26, 2024

Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pinterest. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.

2 Magnificent Stocks to Buy That Are Near 52-Week Lows was originally published by The Motley Fool