With just over a month left in 2022, it seems clear that Nike (NKE 0.83%) and Microsoft (MSFT -0.14%) will be among this year's weakest performers on the Dow Jones Industrials (^DJI 0.77%) index. They make up two of the five worst-performing stocks in the index through mid-November, and their latest earnings announcements weren't well received on Wall Street.

Investors can generate market-beating returns by focusing on temporarily out-of-favor stocks that have otherwise stellar long-term outlooks. That might be the exact situation for these two blue-chip giants.

Let's take a look at whether Nike and Microsoft could be excellent choices for patient investors after their stock price slumps in 2022.

Nike has inventory issues

Nike's stock is getting pummeled by worries about how an economic slowdown might hurt its footwear and apparel businesses. Gross profit margin declined last quarter as the company cut prices. Nike predicted more weakness ahead as management works to bring supply levels back in line with demand.

But things aren't as bad as the most recent 44% inventory spike might imply. That increase had a lot to do with temporary issues like the timing of holiday orders from retailers and the temporary closing of factories in Vietnam and Indonesia a year ago over pandemic concerns. Executives said in late September that they are seeing strong demand for new product introductions despite some short-term oversupply.

Nike also has a good shot at boosting profitability over the next several years as it shifts away from its retailing partnerships toward a more direct relationship with consumers. However, investors might want to watch for concrete signs of this success before calling the stock a screaming buy.

Microsoft has cash

Microsoft's 2022 decline was partly driven by unrealistic expectations from 2021. The stock jumped over 50% last year, or more than double the increase in the Dow, as investors projected pandemic-related growth far into the future.

These growth rates didn't last. Microsoft is seeing slumping demand for PC hardware and pressures in areas like communication software and gaming. It makes sense that the stock would lose some of those 2021 gains in that context.

But the long-term outlook is bright. Microsoft has prime positioning in many attractive tech niches, including cloud enterprise services, video games, and the shift toward flexible working. Growing demand in these areas should help Microsoft expand sales and earnings faster than most of its peers.

In the meantime, the software giant is flush with cash, even after accounting for its upcoming acquisition of Activision Blizzard. Management recently raised the dividend by 10% as the company generated $21.5 billion of operating income through late September.

Sure, those earnings trends are likely to weaken in late 2022 and into early next year. But Microsoft isn't in danger of losing market share or needing to scale back investments in its innovation pipeline. As a result, the stock looks more attractive following its over 25% drop so far this year.

While investors might enjoy solid returns from picking up Nike and Microsoft right now, the software giant seems to have a clearer rebound path ahead.