The markets are coming off a volatile week, but the S&P 500 still managed to squeak out a positive 0.8% gain by the end of it. However, some stocks weren't as lucky: Shopify fell by 12% and Tesla declined by 11%. If you are a bargain hunter, the good news is that there are some decent deals out there right now -- but there's no guarantee how long they may last.
Three stocks that look particularly attractive right now are Cerner (CERN), Walmart, (WMT -0.08%), and salesforce.com (CRM 0.42%). None of these stocks fell by more than 3% in value last week but over the past month they have suffered larger declines, and now could be an optimal time to buy them.
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1. Cerner
In one month, shares of healthcare company Cerner have fallen by 12% while the S&P 500 declined by a more modest 1%. Part of the bearishness is likely because Cerner released its fourth-quarter earnings on Feb. 10 for the period ending Dec. 31, 2020, and the results were a little disappointing. Sales of $1.4 billion were down 3% year over year while diluted per-share earnings of $0.46 were also less than the $0.49 Cerner earned a year ago. If not for divestitures, the company says its sales growth would have been around 1%. A year ago, the company agreed to sell off software products it used in Germany and Spain to CompuGroup for $247.5 million. In 2019, they brought in $81.4 million in sales.
But the company is hopeful for a better path ahead, projecting revenue for 2021 to come in between $5.75 billion and $5.95 billion. At the bottom end of that forecast, that would mean sales growth of 4.4% from the $5.5 billion it generated for all of 2020.
What is great about Cerner is that its business is diverse and there are many ways that it makes money. Revenue from professional services totaled $1.9 billion and made up just over one-third of its sales in 2020. The company also made $1.2 billion from managed services (this includes remote hosting, application management, and disaster recovery), and $1.1 billion from support and maintenance, in addition to other, smaller segments.
With more businesses, including hospitals, going online and relying more on software providers like Cerner to help them manage their data and systems, Cerner could prove to be an underrated investment right now. Trading at a forward price-to-earnings (P/E) ratio of 22, the stock is a steal of a deal when compared to Veeva Systems, for which investors are paying around 80 times the company's future earnings.
2. Walmart
Shares of Walmart are down 11% in the past month, but the big-box retailer always has the potential to be a great long-term investment. Its stores are one-stop shops for consumers looking to minimize their shopping trips amid the pandemic. With the drop in price, the stock is trading at a forward P/E of around 24. That's still a bit higher than rival Target, which trades at a multiple of around 20.
But with Walmart taking on Amazon and launching Walmart+ in September 2020, the company could be worth the premium if it can wrestle away market share from the online retail giant. Walmart is also trying to make it easier for people to utilize its delivery services, announcing this month that it will drop the $35 minimum that it previously required on orders to use express delivery. The service allows consumers to get food, consumables, and many essential products delivered to their doors within two hours (in available areas). It could be an effective way to deter customers from using same-day delivery with Amazon.
Walmart is already doing exceptionally well amid the pandemic, releasing fourth-quarter results on Feb. 18 that showed U.S. e-commerce sales remained strong, growing by 69% in the period ending Jan. 29. Even comparable-store sales in the U.S. rose by 8.6%. While these growth rates may slow down if worries surrounding the pandemic subside, the company is still a solid investment as it continues to try to reach more customers. Walmart's stock closed the week trading at $129. The last time it was lower than that was back in July 2020.
3. Salesforce
Salesforce stock is down 12% in the past month as it, too, has struggled to win investors over lately. Its forward P/E of over 60 isn't cheap and rivals tech giant Amazon, which trades at 64 times future earnings. But investors like Salesforce for its sales growth, and it is a great business to invest in as more companies look to the cloud to simplify their operations and marketing efforts.
The stock is trading at around $210 and it hasn't been this low since August 2020. And if you thought the stock was a decent buy then, odds are you will think it is a deal now, as that was before Salesforce announced plans to acquire collaboration and group messaging company Slack a few months later for $27.7 billion.
It's a big move that can make Salesgrowth's numbers look even more impressive. On Feb. 25, it released its fourth-quarter earnings and sales of $5.8 billion were up 20% year over year. The company expects a similar growth rate to continue in the upcoming fiscal year (2022), projecting that Slack will contribute $600 million in sales -- with the assumption the deal closes late in the second quarter.
This tech giant isn't cheap but getting it at any reduction in value could be a good deal. With businesses cutting staff and costs amid the pandemic, there could be a big need for companies to become more efficient, and that is something Salesforce can certainly help with. Projecting sales numbers is tough amid the pandemic and it wouldn't be surprising for Salesforce to outperform this year.
