If you like buying stocks while they're on sale, there's certainly no shortage of these names right now. That's true even if you limit your portfolio to the bluest of the market's blue chips. The Dow Jones Industrial Average is now down more than 6% from January's high and is back to where it was trading around the middle of last year. That's a distinct lack of progress caused by the fact that many the Dow's constituents are deep in the red for the timeframe in question.
Not all of these losers necessarily deserve the losses they've suffered of late though. Here's a closer look at three ravaged Dow Jones stocks that are ready to rebound in a big way.
Nike
Admittedly, athletic apparel outfit Nike (NKE -0.97%) presents something of a conundrum for investors. Newly unpredictable demand in China -- which accounts for about a fifth of its business -- is making it tough to handicap. At the same time, the world's supply chains are still crimped. It's no wonder the then-overbought stock now sits 20% below November's high.
Now priced almost where it was nearly a year ago though, this weakness has become too good of an opportunity to pass up. This is still the world's leading athletic shoe brand, after all, and it's no slouch on the apparel front either.
Image source: Getty Images.
Sure, a little more certainty in China would be nice; however, that's not its biggest market, or even its second-biggest market. Those honors still belong to North America and Europe, when including the Middle East and Africa, both of which, by the way, saw sales growth in the quarter ending in November as well as the quarter ending in August. Also know that China's headwind is a relatively recent phenomenon -- hardly existing long enough to be considered a permanent problem.
In the meantime, the company continues to build out its own means of connecting with customers, online and offline. Sales it made directly to customers rather than through third-party retail distribution partners accounted for more than 40% of the previous quarter's revenue, up 8% year over year, while Nike's digital sales improved 11% year over year during the same three-month stretch. This home-grown progress is a big reason analysts are still calling for company-wide sales growth of nearly 6% this year, which is huge for an organization of Nike's size.
Salesforce.com
Down by more than a third since November's peak (and toying with new 52-week lows), shares of Salesforce.com (CRM -1.33%) appear to be radioactive to investors -- nobody wants to touch it. The more it falls, the more radioactive it seems to become.
As the old adage goes though, expect it when you least expect it. The selling here has been so pointed that a hard landing is likely, spurring a rebound that's just as big and just as quick.
Salesforce.com is one of the world's first cloud-computing companies, offering salespeople online, browser-based access to customer databases. It's still one of the world's most prolific cloud companies as well, boasting more than 150,000 corporate clients that collectively contributed $21 billion worth of revenue in fiscal 2021, up 24% from 2020's top line. That figure's expected to swell to more than $26 billion for the year now underway, en route to nearly $32 billion next fiscal year. Profits are growing at a comparable clip.
This stock's not cheap, mind you... perhaps one of the key reasons it's been up-ended over the course of the past few weeks. As of the latest look, shares are valued at more than 40 times their trailing and forward-looking earnings.
This is a case, however, where the growth rate more than justifies the premium.
Honeywell
Finally, add Honeywell International (HON -1.29%) to your list of beaten-down Dow Jones stocks ready to dish out a major bounce-back.
Honeywell is of course the iconic industrial name that makes everything from thermostats to aircraft parts to drug-development technologies to plastic recycling solutions, and more. None of it is particularly riveting stuff. But, all of it is stuff you would notice is missing if manufacturers suddenly stopped making it. This perpetual marketability is the chief reason this company is a reliable revenue and profit producer. Indeed, Honeywell International hasn't failed to top any quarter's earnings estimates at any point in the past four years, including the tricky time in 2020 when the pandemic was first ripping across North America.
The company hasn't been given any credit from the stock market for this dependability of late, by the way, with shares sliding 15% from January's peak, and down 20% from August's high. Much of that loss can be chalked up to Honeywell's guidance for 2022 posted earlier this month. The company is looking for a top line of between $35.4 billion and $36.4 billion and earnings of between $8.40 and $8.70 per share. The revenue expectation is in line with estimates, but the earnings guidance range didn't compare favorably to the analyst community's collective guess of $8.57.
I'm inclined to believe that the worst could be over for Honeywell. After all, the company has a penchant for posting more profits than anyone's generally led to believe are coming. An earnings surprise may end up being the psychological bullish catalyst needed to start the stock's recovery move.
