Thanks to the risk and uncertainty the coronavirus health crisis has brought to the market, some stocks have fallen much further than what is fair. Now is a good time to look closer and find stocks that have the potential to bounce back sooner rather than later. 

Investors with a long-term outlook should consider retail giant Nordstrom (NYSE:JWN) when looking for quality undervalued stocks. The company is resilient and adapting to the changed retail environment.

Another gem, hidden in the beleaguered commercial real estate market, is Johnson Controls International (NYSE:JCI). The diversified technology and industrial company is showing how it is part of the health crisis solution.

The retail revolution: Adapt, survive, and thrive

The stock of Nordstrom, the venerated department store renowned for customer service, is down more than 60% in 2020, comparable to peers Macy's and Kohl's. But I don't think Nordstrom belongs in the same boat.

The difference is the brand's success as an omnichannel business that aims to sell to people across multiple platforms. Nordstrom built a successful omnichannel model before COVID-19, and it is paying off. Shoppers browsing online can find an item anywhere in the Nordstrom system, even if it's the last one in stock, or be offered alternatives if it's sold out.

In keeping with Nordstrom's high-touch customer experience, sales associates are making product videos and stylists are putting together entire recommended outfits on "look boards" to connect with clients during the pandemic. The efforts are paying off. "… overall, we're actually exceeding what we had planned for in the quarter [for sales]. … Our merchandise returns are not what we thought they were going to be and had reserved for. … So the good news is it's opening up dollars for us to buy fresh goods, which we know our customers love," CFO Anne Bramman said during a July 7 conference call.

A man uses a tablet to shop online for shoes.

Image source: Getty Images.

But the company has taken a hit thanks to the pandemic. Analysts don't expect a return to profitability until 2022.

The COVID-19 health crisis caused Nordstrom management to accelerate marketing strategy already in place. Even before the mandated store closures, the company was working to establish synergies between online and physical store assets, including between full-price and off-price offerings. According to Nordstrom, if a customer who previously only bought from either Nordstrom or Nordstrom Rack starts shopping the other brand, the effect is a 10 times increase in customer lifetime value.

While stores were temporarily closed, the e-commerce business saw more than 50% growth in customers new to Nordstrom. That's great news, but the key to success is hanging on to the new customers, and their willingness to experience Nordstrom across its spectrum of full-price and off-price offerings.

Nordstrom has been compelled to adapt quickly to a changed retail landscape. The company shifted its big annual anniversary sale to August this year, and customer response will indicate the speed of progress in its omnichannel approach.

Nordstrom is maintaining contact with customers and growing the omnichannel business, has management open to change, and is financially sound.  For these reasons, I think the company will emerge stronger after the coronavirus crisis and is currently a long-term investment opportunity for patient investors with a higher than average risk tolerance.

Technology is equal to COVID-19 challenge

COVID-19 has had a profound impact on the commercial real estate market. Work-at-home orders emptied office buildings, and new development mostly screeched to a halt.

Johnson Controls International is a producer of commercial and residential building supplies, including heating, ventilation, and air-conditioning (HVAC) systems. During the pandemic it has suffered along with the rest of the industry. But the company introduced a new, smart building control system that it believes will be a game changer.

Third-quarter results were reported July 31. Revenue was down 16% year over year, better than analyst expectations of a 20.3% loss.

The company sees good signs. CEO George Oliver said on the quarterly conference call " ... we believe orders have bottomed and our pipeline remains solid. We've also seen sequential improvement in our top line and expect that to continue in the fourth quarter."

A commercial HVAC worker tests an air-conditioning and ventilation system.

Image source: Getty Images.

Also on July 31, Johnson Controls launched its new product in smart buildings, called OpenBlue, based on connectivity and communication between all systems installed in a building, including those that manage elevators, locks, air flow, and lighting.

OpenBlue is being touted to help customers get back to work as "safely and efficiently as possible" during the pandemic. The company notes it can, for instance, help companies monitor for social distancing and install "touchless environments."

Johnson Controls' share price is down 5.9% so far this year, and it seems like the challenges the company faces are more than reflected in the price.

The company's OpenBlue vision offers a complete package for a safe and healthy building environment, integrating Johnson Controls' core building systems, enhanced by Fortune 100 technology partners. With the technology specifically addressing COVID-19 risks, I think it's definitely a game changer.

With a forward price-to-earnings ratio of 16, compared with the industry average of 29, I think the stock is likely to move up as building owners adapt to the new normal.