Tools and outdoor products maker Stanley Black & Decker (SWK -0.52%), machine vision company Cognex (CGNX -0.03%), and pilot simulator and training company CAE (CAE 0.16%) are not having the year investors hoped they would. However, share-price falls often create buying opportunities, so it's time to look closely at all three stocks. Are they a buy now or worth avoiding? Here's what you need to know before jumping into these stocks.

1. Stanley Black & Decker

The company started 2022 in an optimistic mode. Management was looking forward to integrating its acquisition of outdoor lawn and garden products maker MTD into its portfolio while refocusing on its core tools, storage, and industrial products markets. To that end, management sold Stanley's electronic security business and its access-door business in two separate transactions in 2022.

Unfortunately, the company has been hit by a series of adverse events. Commodity prices and other cost inflation has proved persistent and far worse than management's initial expectations in 2022. In addition, poor weather hit sales of its outdoor equipment (not a great way to start with MTD), and the slowdown in consumer spending hit DIY spending. 

The result is a massive cut to full-year guidance from adjusted EPS of $12-$12.50 in February to just $5-$6 now. 

That said, new CEO Don Allan has reacted by initiating cost-cutting and restructuring actions, which the company believes could result in $7.25 in EPS in 2023 and $2 billion in annual cost savings within three years. It's a compelling proposition, and investors will be hoping Allan has put all the bad news out there for Stanley to start a run of expectation-beating earnings. On the other hand, the economy is slowing, and Stanley is under pressure to hold pricing while it tries to reduce inventory in a difficult DIY market. As a result, the stock looks like a good value, but don't be surprised if there's more bad news to come. 

2. Cognex 

The machine vision company has also had a disappointing year. However, as with Stanley Black & Decker, Cognex investors believed the company was set up for a good 2022. Its three major end markets are automotives, consumer electronics, and logistics (e-commerce warehousing). The latter market has been exceptionally strong in the last few years (Cognex grew its logistics sales at a 50% annual rate in the previous few years), while automotive production was due a bounce after a COVID-19 hit in 2021 (many plants were shut down). Consumer electronics was set for a good year, with smartphone sales set to grow.

Unfortunately, the recent slowdown in consumer spending caused a pause in some e-commerce warehouse spending, and the automotive industry continus to suffer supply chain shortages (not helped by the war in Ukraine). In addition, industry experts are forecasting smartphone sales will decline in 2022.

If that wasn't bad enough, a fire at a primary contractor site destroyed inventory, and Cognex will have to replace it while paying relatively high prices due to the economic supply chain difficulties. 

I think the company is doing the right things by building relationships with huge players in its end markets. As a result, it will surely recover over time, probably with a higher adoption rate of its machine vision technology. 

3. CAE

The case for buying the pilot simulator and training company is based on its potential to benefit from the recovering commercial aviation market and the pilot shortage. With many pilots retiring early due to the pandemic and many trainees abandoning their careers simultaneously, there's a need for pilot training and retraining as flight departures improve. Indeed, the civil side of the business is doing fine -- with revenue up 11% year-over-year in the first quarter of 2023 and orders up a whopping 54%. CAE's civil aviation operating income was $75 million Canadian dollars in the quarter.

Unfortunately, CAE's defense and security segment has been the problem recently. The segment had a loss of CA$21.2 million in the quarter, driven by a charge totaling "$28.9 million in the quarter, a result from our reassessment of cost estimates following discussions with our customers this past June," according to CEO Marc Parent on the earnings call. Parent was forthright on the call, saying, "I feel pretty darn confident that [we] can isolate these programs." However, investors will want to see evidence that there aren't further issues on defense contracts in the next quarter's results before feeling fully confident in buying in.