.jpg)
As I write this in early Wednesday afternoon trading, Barchart.com’s summary of 52-week highs and lows leans heavily to the negative, with 47 NYSE and 157 Nasdaq stocks hitting 52-week lows while only five NYSE and seven Nasdaq stocks are hitting 52-week highs.
It seems like only yesterday that you couldn’t find a stock hitting a 52-week low to save your life. On March 28, the S&P 500 hit an all-time high of 5,264.85. In the 13 trading days since it’s given back more than 4% of its value.
You wouldn’t think that would flip the ratio so quickly, but here we are three weeks later.
So, for today’s commentary, I’m taking off my momentum hat and replacing it with a value cap. I’m selecting three stocks to buy on the dip, at least one each from the NYSE and Nasdaq.
Becton Dickinson
Becton Dickinson (BDX) represents the NYSE. In Wednesday trading, it hit a 52-week low of $229.40, the 12th in the past year.
If you haven't followed this company in a while, you would probably remember it for its needles and syringes. As a kid, I had the BD logo etched in my brain because of my weekly allergy shots.
However, today, it considers itself more of a medical technology company, operating three business segments: BD Medical (47% of fiscal 2023 revenue), BD Life Sciences (27%), and BD Interventional (26%). Approximately 58% of its revenue is from the U.S., with the remaining 42% elsewhere.
It’s not a mystery why BDX stock is down nearly 10% over the past year. While revenues are growing, up 2.6% in Q1 2024, operating income is down almost 25% to $439 million, an operating margin of 9.3%, 350 basis points less than a year ago.
In its Q1 2024 press release, it raised its adjusted EPS for 2024 to $12.94, up from $12.85. It trades at 17.9x its projected 2024 earnings.
From a valuation perspective, nothing jumps out at me that suggests its stock is overbought. However, its shares are flat over the past five years, leading me to believe its story isn’t resonating with investors.
It’s not too far off a five-year low of around $211. Options might be the safest way to take a flyer on this forgotten healthcare stock.
Chuy’s Holdings
Chuy’s Holdings (CHUY) is the first of two Nasdaq stocks to hit 52-week lows. The Tex-Mex restaurant chain hit its 11th 52-week low today at $30.30. It’s down nearly 12% over the past year but up 45% over the past five years.
From the analysts' perspective, they don't hate CHUY stock. Nine cover it, giving it a Moderate Buy rating (3.89 out of 5) with a mean target price of $38.83, 28% higher than where it’s currently trading, so Wall Street hasn’t thrown in the towel just yet.
Chuy’s reported Q4 2023 results in February. Its revenues were 11.8% higher than Q4 2022, to $116.3 million, in line with the analyst estimate. Its same-store sales grew by 0.3%, which is four basis points less than the consensus. On a non-GAAP basis, it made $0.45 a share, 18 cents higher than a year ago and seven cents clear of the street.
For 2023, it grew revenue by 9.3% to $461.3 million, with 3.3% same-store sales growth. Its adjusted net income for the year was $1.97 a share, 44% higher than in 2022. Its restaurant-level operating margins were 20.2%, 200 basis points higher than a year ago.
They aren’t Chipotle Mexican Grill (CMG) numbers, but they’re not terrible either.
“Our effective four-wall execution resulted in a 200 basis-point expansion of restaurant-level margins to over 20% representing our best result in over a decade, excluding the covid-impacted 2021, and among the best in the industry,” stated CEO Steve Hislop.
In 2023, it opened three new locations. In 2024, it expects to open between six and eight, doubling its store openings from a year ago.
While earnings will be a little lower this year due to more store openings—$1.92 at the midpoint of its guidance—it trades at just 15.8x 2024 EPS. Chipotle trades at 55x forward earnings.
Considering it traded near $50 in April 2021 and over $40 last August, it’s doing enough to be valued higher.
VeriSign
The second of two Nasdaq stocks is VeriSign (VRSN). It hit a 52-week low today of $182.13, its 22nd 52-week low of the past year.
VeriSign is arguably one of the world’s most mundane but necessary stocks listed on Nasdaq. It provides domain name registry services for the .com, .net, .cc, .tv, .gov, .jobs, .edu, and .name domain name directories. For the com, .net, and .name domains, it is the exclusive registrar for the Internet Corporation for Assigned Names and Numbers (ICANN).
VeriSign is Berkshire Hathaway’s (BRK.B) 17th-largest equity position. It owns 12.8% of the company, but its $2.3 billion holding accounts for just 0.6% of the company's $363 billion equity portfolio.
In 2023, VeriSign earned $817.7 million in net income from $1.49 billion in revenue for a 54.8% net margin, 750 basis points higher than a year ago. It’s not going out of business anytime soon.
Its current P/S ratio is 12.7x. It hasn’t been this low since 2017.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
