There are plenty of investing axioms out there to help guide your stock picking. Some of them are classics. One classic from Warren Buffett goes, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." Let's take a closer look at three potentially wonderful companies with stocks that are not only trading at a fair price, but are all currently down more than 50% from their all-time highs.
There's obviously a reason for the declines, and there's still downside risk for these companies. But with that said, there's also substantial upside potential from here, and the stocks appear to be a great value on a risk-reward basis. Here's why.
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A value stock to buy
Management claims GXO (GXO 3.88%) is the "largest pure-play contract logistics provider in the world" and a leader in implementing productivity-enhancing technology (such as automation, robots, and intelligent warehousing solutions) for its customers. It should be a good growth market, as the increasing complexity of warehouse technology and the benefit of outsourcing logistics push the market toward solution providers like GXO.
NYSE: GXO
Key Data Points
That said, the company has had a difficult couple of years, as organic revenue growth has slowed due to an inevitable retraction in spending on e-commerce warehousing following the previous boom created by the lockdowns, during which businesses rushed to pull forward investment.
The changing dynamics of organic revenue growth are clearly demonstrated in the table. However, the company appears to be past the worst, and with organic revenue growth of 4.1% in the first nine months of 2025, it's on track to meet its 2025 guidance.
|
GXO Logistics |
2021 |
2022 |
2023 |
2024 |
2025 Estimate |
|---|---|---|---|---|---|
|
Organic revenue growth |
15% |
15.40% |
2% |
3% |
3.5% to 6.5% |
Data source: GXO Logistics.
Wall Street analysts estimate GXO will generate $341 million in free cash flow (FCF) next year, putting the company on a forward price-to-FCF multiple of 17.7 times FCF. Assuming a multiple of 20 times for a mature industrial company (a conservative assumption, as GXO clearly has good long-term growth prospects), the consensus target of almost $65 (implying 23.6% upside) looks realistic.
A growth-at-a-reasonable-price stock to buy
Zebra Technologies (ZBRA 4.45%) is a leader in the automatic identification and data capture industry. In plain English, this refers to the barcode readers, RFID devices, mobile computers, and specialty printers commonly used in the retail (including e-commerce warehousing), logistics, and manufacturing industries.
NASDAQ: ZBRA
Key Data Points
Like GXO, Zebra experienced a surge in spending during the lockdowns and then suffered a decline in sales as customers destocked after building up inventory during the boom. Furthermore, the retail sector has been negatively affected by relatively high interest rates and tariffs in 2025.
Still, these factors won't last forever, and Zebra's long-term growth outlook remains positive, as its solutions enable customers to digitally capture information. Moreover, Zebra is embedding artificial intelligence (AI) solutions that will enable device users to get immediate answers and actionable insights into their daily workflows. These AI-driven solutions could drive an upgrade cycle in the future and increase the value of its overall solutions to customers.
Management expects $800 million in FCF in 2025, with Wall Street penciling in $888 million for 2026, putting Zebra on less than 15 times forward FCF in 2026. As such, the Wall Street target price of $358 (implying 37% upside) looks reasonable.
The best chip stock to buy
The investment case for ON Semiconductor (ON 2.64%) is based on two ideas: 1. The key end markets for its intelligent power and sensing chips are electric vehicles (EVs), and 2. The industrial sector (including industrial automation, energy infrastructure, and AI data centers) has experienced a cyclical slowdown over the last couple of years.
NASDAQ: ON
Key Data Points
As such, ON Semiconductor could be poised for a cyclical recovery that isn't yet reflected in the stock price. At the same time, its long-term secular (not depending on the economic cycle) growth prospects look assured.
The cyclical weakness in its EV end markets stems from a slowdown in EV spending following the pull-forward in investment during the COVID-19-related lockdowns, as well as from relatively high interest rates that are curtailing the growth of EV sales. However, EVs remain the growth area of the auto market, and while automakers are shelving earlier development plans, they are shifting toward investing in more targeted, affordable models. Consequently, EV spending should grow in the future.
As for the industrial sector, it's little discussed, but U.S. manufacturing has been in contraction territory for most of the last couple of years, not least due to a significant inventory correction as customers run down previous high inventories built up during the supply chain crisis that hit the economy after the lockdowns ended.
History suggests it will clear in time, leading to a pickup in growth in ON Semiconductor's industrial markets, supported by the growth kicker from its partnership with Nvidia on the new generation of data centers. Trading at less than 16 times the estimated 2025 FCF, the stock looks like an excellent value.
