3 stocks that haven’t been this cheap in more than 5 years

If you’re a bargain hunter, there are some deeply discounted stocks you might want to consider buying right now. These stocks aren’t just trading at 52-week lows, they’re trading at multi-year lows. They haven’t traded at these levels in more than five years — and some have never been this low.

Of course, there is a risk that comes with these stocks. They’re trading down for good reason, but there’s also plenty of potential upside. In the end, it may come down to how much risk you are willing to bear.

Grocery outlet (GO -1.24%), general dollar (DG -0.36%)and Spirit Airlines (SAVE 0.41%) there are three cheap stocks right now for various reasons. Worth a closer look as the game returns?

1. About the grocery store

Food stocks are generally stable investments that investors want to hang on to. But that wasn’t the case with Grocery Outlet. This retailer exclusively operates supermarket locations that offer off-price, overstocked, and private label and brand name suppliers.

Shares of Grocery Outlet were already trading off their mid-2022 highs, but then went on a sizable buying spree in April 2024 that fueled investor concerns. On April 2, the company strengthened its presence in several markets when it completed the acquisition of United Grocery Outlet. However, investors were unimpressed by the combined company’s performance. Shares have fallen 37% since January and are trading at an all-time low for Grocery Outlet, which went public in 2019.

The problem is that expenses are rising and already thin margins are being squeezed even further. Getting bigger did not lead to a stronger result. In its most recent quarter, which ended in June, Grocery Outlet’s profits fell 43% to just $14 million on revenue of $1.1 billion. Profits are down, in part, because the retailer is making system upgrades. CEO RJ Sheedy Jr. said the upgrades are now in place and the financials should improve from that point, but investors remain hesitant.

Investors considering this stock will need to have faith that the CEO can turn things around. I would hold off on buying this grocery stock for at least a few more quarters until Grocery Outlet proves Sheedy right in his claim and the financials are better.

2. Dollar General

Discount stores are defensive stocks. They tend to provide investors with stability during tough economic times. They also tend to be good options for long-term growth. Defensive stock Dollar General has been disappointing in that regard lately, though. Along with labor issues and safety issues at its stores, the results show some weakness, especially compared to its peers.

In August, Dollar General reported second-quarter results that showed net sales rose about 4% year-over-year to $10.2 billion, but same-store sales rose just 0.5% . The company appears to be relying heavily on new store openings for growth. That didn’t translate to a better bottom line: Dollar General’s Q2 operating profit fell 21% year-over-year to $550 million. While Dollar General still reports growth, it also reports that its core customers are “financially constrained.”

That’s not a phrase investors want to hear, and as a result, Dollar General shares haven’t traded lower since 2017.

This may be a murky time to buy the stock, but it may be a good long-term play because as economic conditions improve and the primary customer is in better shape, this could turn the tide for the stock. The big question is how long this process might take. If you’re willing to be patient and hold out for what could be a bumpy ride with the stock, Dollar General could be a good contrarian investment to add to your portfolio today.

3. Spirit Airlines

Share prices of low-cost carrier Spirit Airlines went over a cliff in January after a judge blocked its merger with JetBlue Airways. Spirit’s stock hasn’t recovered from that decision. Since then, it has plunged even more sharply as investor concerns that the airline may not be able to survive in the long term.

Operating income in the most recent period, which ended June 30, totaled $1.3 billion and was down 11% year over year. More concerning was Spirit’s $152.5 million operating loss. It also burned through $270 million in cash through its day-to-day operations over the past six months.

The company says it has $1.1 billion in available cash, but its operations don’t appear to be sustainable at this point, and that’s the big risk for investors. Spirit Airlines is trading at an all-time low (it went public in 2011), and the danger is that without reason to believe its operations will improve or that an acquisition can save the business, things may not get much better for stock soon.

Investors should tread carefully with Spirit Airlines stock — it might be the riskiest on this list.