The stock market has gone through a rough patch recently. Investors are nervous about lingering inflation and higher interest rates, and mounting geopolitical tensions in the Middle East have added to the cautious tone in financial markets. While many investors are dialing back their market exposure due to these concerns, the current fearful sentiment could mark a buying opportunity. As the adage goes: The time to be greedy is when other people are fearful.
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And what better place to go looking for a bargain in this market than in stocks that have already gotten pounded over the past year? The following high-risk stocks have fallen 30% or more over the past 12 months. But if they turn the corner, they could deliver tremendous gains for aggressive investors later in 2024 and beyond:
— Yum China Holdings Inc. (ticker: YUMC)
— Albemarle Corp. (ALB)
— Walgreens Boots Alliance Inc. (WBA)
— Ubiquiti Inc. (UI)
— Chewy Inc. (CHWY)
— Concentrix Corp. (CNXC)
Yum China Holdings Inc. (YUMC)
Yum China is the Chinese franchiser for Yum! Brands Inc. (YUM). It operates Yum’s mainline brands, most notably KFC and Pizza Hut, along with several homegrown Chinese restaurants. Like most Chinese stocks, Yum China has slumped in recent quarters. The company faces challenging political and economic headwinds. With the local economy in a serious downturn, investors are understandably skeptical.
But the company’s financial results are hanging in there. Selling tasty food at a value price is a time-honored business model that can work even during periods of economic malaise. Shares trade at 19 times forward earnings, even with depressed current earnings. YUMC stock also offers a dividend and is repurchasing a large quantity of stock in 2024, giving shares underlying support during the current economic volatility.
Albemarle Corp. (ALB)
Albemarle is a specialty chemicals company and is one of the world’s largest lithium producers. Though the company is based in North Carolina, it also has major mining operations in Chile and Australia. Shares have plummeted over the past year as the electric vehicle industry has lost steam. In particular, Tesla Inc. (TSLA) is dealing with falling consumer demand and has cut vehicle prices. This downturn in the EV market has had a brutal impact on battery producers, which in turn caused lithium futures to fall by more than two-thirds from their 2022 peak. Albemarle’s earnings will be greatly depressed in 2024.
There could be considerable value in ALB stock at this price point, however. For investors who believe in a long-term EV success story, battery demand should come roaring back. Albemarle trades like a totally busted concept, but as long as EV demand eventually picks back up, lithium should recover with it.
Walgreens Boots Alliance Inc. (WBA)
At one point, pharmacy chains like Walgreens and CVS Health Corp. (CVS) seemed like low-risk, blue-chip investments. That logic has been turned on its head over the past few years. Rising competition, e-commerce, vertical integration of health care and insurance markets, and changing consumer behavior are all weighing Walgreens down. Walgreens also made a misstep with its purchase of the U.K.-based Boots Alliance. That merger never worked as planned, and Walgreens has struggled to recover. Historically, Walgreens had paid a large dividend, but it slashed it recently. The company lost money last year, and badly needs a strategic reset.
For aggressive investors, though, there’s a real upside case here. Walgreens shares go for about six times estimated forward earnings. Pharmacies should remain an important service in people’s lives. It seems unlikely that the business will go totally online in the years to come, meaning that Walgreens could be set for a comeback once management makes the necessary changes.
[SEE: 8 Best Defense Stocks to Buy Now]
Ubiquiti Inc. (UI)
Ubiquiti is a technology company that develops networking hardware and solutions for telecom providers, enterprises and individual consumers. The company’s products have served various niche markets, taking market share from larger players like Cisco Systems Inc. (CSCO). Ubiquiti’s management has proven to be shrewd and aggressive over the years, leading to tremendous growth in both the operating business and stock price.
The company is quite leveraged and has taken some operational risk to achieve its growth. Ubiquiti currently has a negative book value, which speaks to its significant debt load. This makes the company a riskier bet during cyclical downturns. And right now, IT departments are cutting back spending as the pandemic-fueled growth of internet services has greatly decelerated. As a result, Ubiquiti shares are down 53% over the past year. There’s real balance sheet risk here, but Ubiquiti appears to be a quality tech company currently selling at a bargain price.
Chewy Inc. (CHWY)
Chewy is an online e-commerce company focused on pet food and products. Well-known investor Ryan Cohen founded Chewy back in 2011. It grew tremendously in its early years, and Chewy enjoyed another surge during the pandemic as people got new pets and spent lavishly on them during the stay-at-home days.
Since then, pet spending growth has reversed, and investors have thrown in the towel on the sector. That’s understandable. Chewy is merely around breakeven profitability today. Admittedly, the company faces significant competition from both online and from brick-and-mortar stores. These factors suggest that Chewy will still have operational challenges in the years to come. However, the company has a good brand and sells products that should enjoy strong long-term demand growth. When pet spending recovers, Chewy stock should get out of the doghouse.
Concentrix Corp. (CNXC)
Concentrix is an IT services company focused on customer experience. The company operates a wide variety of products and services. Its core business is to help large enterprises such as banks and airlines manage customer interactions across voice, chat, email and other mediums. Shares have gotten pounded over the past year. Investors seem to believe that Concentrix is now an obsolete company thanks to artificial intelligence. And it’s true that AI will likely eat into the company’s total addressable market.
That said, with the collapse in the firm’s share price, CNXC stock is now going for about five times forward earnings. The company is still growing revenues and earnings for the time being. It’s certainly possible that a high-powered, all-in-one AI chatbot will make human relations services and call centers utterly obsolete. That’s the risk here. But in the event that those AI solutions take a while to be developed and rolled out, and that human touch remains in customer relations for years to come, Concentrix looks like a total steal for aggressive investors at today’s price.
[See: 10 of the Best Stocks to Buy This Year.]
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6 High-Risk Stocks for Aggressive Investors originally appeared on usnews.com
Update 04/30/24: This story was previously published at an earlier date and has been updated with new information.
