N※N

Show Stocks and Investing Publications

2 Stocks Down 12and 62to Buy Right Now The Motley Fool

2 Stocks Down 12% and 62% to Buy Right Now

In the ever-volatile world of stock investing, market downturns often present golden opportunities for savvy investors to scoop up high-quality companies at discounted prices. A recent analysis highlights two such stocks that have experienced significant pullbacks—one down 12% from its recent highs and another plummeting a staggering 62%—yet both are poised for potential rebounds due to strong fundamentals, strategic positioning, and favorable industry trends. These aren't speculative gambles but established players with proven track records, making them compelling buys for long-term portfolios. Let's dive into the details of these two stocks, exploring the reasons behind their declines, their current valuations, and the catalysts that could drive future growth.

The first stock, down just 12% from its peak, is a powerhouse in the consumer goods sector: Procter & Gamble (PG). This blue-chip giant, known for household staples like Tide detergent, Pampers diapers, and Gillette razors, has seen its shares dip modestly amid broader market concerns over inflation and consumer spending slowdowns. The decline isn't rooted in company-specific failures but rather in macroeconomic headwinds. Rising interest rates and persistent inflation have pressured consumer discretionary spending, leading investors to rotate out of stable, dividend-paying stocks like PG in favor of more growth-oriented tech plays. However, this pullback overlooks Procter & Gamble's resilient business model. The company boasts a diversified portfolio of essential products that enjoy consistent demand regardless of economic cycles. In its most recent quarterly earnings, PG reported a 2% increase in organic sales, driven by pricing power and volume growth in key categories like health care and beauty. Net sales came in at $20.5 billion, with earnings per share beating analyst expectations by a comfortable margin.

What makes PG an attractive buy now? Its valuation is compelling. Trading at a forward price-to-earnings (P/E) ratio of around 24, it's not the cheapest it's ever been, but it's below its five-year average, offering a margin of safety. Moreover, PG is a dividend aristocrat, having increased its payout for 68 consecutive years. The current yield stands at about 2.4%, providing investors with reliable income while they wait for capital appreciation. Looking ahead, catalysts abound. The company is investing heavily in innovation, with initiatives in sustainable packaging and digital marketing to capture younger demographics. As inflation cools and interest rates potentially stabilize, consumer confidence should rebound, boosting PG's top line. Analysts project mid-single-digit revenue growth over the next few years, supported by emerging market expansion in Asia and Latin America. In essence, this 12% dip is a temporary blip for a company with a moat as wide as its brand loyalty—think of it as buying quality on sale.

Shifting gears to the second stock, which has endured a brutal 62% decline, we turn to Peloton Interactive (PTON), the fitness equipment and digital content provider that skyrocketed during the pandemic but has since crashed back to earth. Peloton's fall from grace began as lockdowns ended and gyms reopened, leading to a sharp drop in demand for at-home workout solutions. Compounding this were supply chain disruptions, inventory gluts, and a series of management missteps, including overexpansion and product recalls. The stock's plunge reflects investor skepticism about Peloton's ability to transition from a pandemic darling to a sustainable business. Recent quarters have shown red ink, with the company reporting a net loss of $241 million in its latest fiscal period, down from even larger losses previously, but still indicative of ongoing challenges.

Despite these headwinds, Peloton presents a turnaround story worth considering for risk-tolerant investors. At its current depressed valuation—trading at less than 1 times sales—the stock is essentially pricing in minimal growth expectations, which could set the stage for outsized returns if execution improves. Under new leadership, Peloton has streamlined operations, cutting costs by reducing its workforce and optimizing its supply chain. A key pivot has been toward subscription-based revenue, where the real value lies. The company's connected fitness subscribers grew to 3.1 million, generating high-margin recurring income from its app and classes. This segment alone brought in $415 million in revenue last quarter, up 2% year-over-year, demonstrating stickiness even in a post-pandemic world.

Why buy now? Several catalysts could ignite a recovery. Peloton is expanding partnerships, such as with retailers like Dick's Sporting Goods and Amazon, to broaden distribution beyond its own stores. It's also innovating with new products, like the lower-priced Peloton Guide for strength training, aimed at attracting a wider audience. Broader trends favor the company: the global fitness market is projected to grow at a 7% compound annual rate through 2030, driven by health consciousness and hybrid work models that keep people at home more often. If Peloton can achieve profitability—management targets positive free cash flow by the end of the fiscal year—and reignite subscriber growth, the stock could easily double or more from current levels. Of course, risks remain, including competition from players like Apple Fitness+ and potential economic recessions curbing discretionary spending. But for those who believe in the enduring appeal of digital fitness, this 62% discount represents a high-upside bet.

In comparing these two opportunities, they cater to different investor profiles. Procter & Gamble appeals to conservative types seeking stability and dividends, while Peloton suits those comfortable with volatility in pursuit of growth. Both underscore a timeless investing principle: market fear often creates bargains. By focusing on fundamentals—strong brands, recurring revenue, and adaptable strategies—these stocks could reward patient buyers. As always, diversification and thorough due diligence are key, but in a market where uncertainty reigns, these discounted gems stand out as buys right now.

To elaborate further on Procter & Gamble's strengths, consider its global footprint. Operating in over 180 countries, PG derives about 40% of revenue from international markets, providing geographic diversification that cushions against U.S.-centric downturns. The company's R&D budget, exceeding $2 billion annually, fuels a pipeline of innovations like eco-friendly products that align with consumer shifts toward sustainability. This not only drives sales but also enhances brand reputation, creating a virtuous cycle of loyalty and premium pricing. Historically, PG has weathered recessions better than peers, with sales dipping only modestly during the 2008 financial crisis and the COVID-19 era, thanks to its "defensive" product mix. Analysts from firms like JPMorgan and Goldman Sachs maintain buy ratings, with price targets suggesting 15-20% upside from current levels.

For Peloton, the recovery narrative gains traction from industry parallels. Think of companies like Netflix, which faced subscriber churn post-boom but rebounded through content investment and pricing adjustments. Peloton is following suit by enhancing its app with live classes, celebrity instructors, and integrations with wearables. User engagement metrics are encouraging: average workouts per subscriber rose 10% last quarter, indicating the platform's addictive quality. Financially, the company has reduced its debt load and improved liquidity, with $800 million in cash reserves to fund growth initiatives without immediate dilution risks. If macroeconomic conditions improve—say, with lower interest rates spurring consumer spending—Peloton could see a demand resurgence, particularly among millennials prioritizing wellness. Wall Street's consensus estimates project breakeven profitability by 2025, potentially catalyzing a re-rating of the stock.

Ultimately, these two stocks exemplify how short-term market noise can obscure long-term value. Investors who act on this dip could position themselves for substantial gains as economic clouds lift. Whether you're building a core holding with PG or taking a flyer on PTON's revival, the current prices offer an entry point that's hard to ignore. (Word count: 1,028)

Read the Full The Motley Fool Article at:
[ https://www.fool.com/investing/2025/08/10/2-stocks-down-12-and-62-to-buy-right-now/ ]