3 battered S&P 500 stocks poised to rebound big
They may be the big names in their respective industries. But just because a company is part of the S&P500 (SNP INDEX: ^GSPC) large-cap index doesn’t mean its stock can’t be completely upped. While the index is up 13% over the last 12 months, more than 100 of those 500 names are in the red for this period, and more than 70 of them are down double digits.
The funny thing is that three of these S&P 500 tickers were erratically and oversold. They are now more than ready to organize a purchase-worthy recovery effort. Here’s a closer look.
In light of the very first contraction Metaplatforms (NASDAQ:FB) reported for the number of monthly users of its flagship social media website – Facebook – last quarter, it would be easy to assume that other social networking gear Twitter (NYSE: TWTR) faces the same headwind. The market certainly treated Twitter shares as they do. Twitter shares are down more than 40% from the October high, and still in sight of the new 52-week low reached last month.
It’s mostly an undeserved weakness, though.
Although technically the same company, Facebook and Twitter are significantly different from each other. Facebook’s relatively open publishing platform opens the door to credibility issues that become problems for advertisers. While Twitter is also in the advertising business, its much simpler approach to online communications avoids many of Facebook’s own posting pitfalls.
To that end, Twitter’s monthly user count was about 3% higher in the last quarter of last year than in the third quarter. It’s a small improvement, but one that Facebook couldn’t match. And Twitter’s revenue for the just-ended fourth quarter grew 22% year over year, compared to Facebook’s more modest 20% growth.
That advantage isn’t reflected in Twitter’s deteriorating share price, which was also weighed down by news in November that founder and CEO Jack Dorsey was stepping down from it. Once investors realize that the microblogging platform is still on course to see revenue growth of 18% this year and nearly 22% next year, the pullback could dissipate significantly.
Penn National Gaming
Penn National Gaming (NASDAQ: PENN) may not be a priority prospect when looking for an investment in gambling and casinos. In the wake of the stock selling off 63% from last March’s peak, however, perhaps that should be the case.
Yes, the gaming industry is recovering from its pandemic-induced lull. The American Gaming Association even recently reported that US gaming revenue hit a record $53 billion in 2021, ending the year accelerating that growth. To wit, the total fourth-quarter domestic take was another record high of $14.3 billion, surpassing the then-record third-quarter figure of $13.9 billion.
Things aren’t quite as fast overseas, but Mordor Intelligence estimates that the global gaming industry will continue to grow at an annualized rate of 9.6% through 2027. With Penn National’s 44 locations all in United States, the company is well positioned. to tap into the rising tide of the area where it rises the most.
That’s not even the main reason you’d want to own a piece of Penn for the next few years, though. The most optimistic argument for buying Penn National Gaming is its impressive presence in the still nascent online gaming industry. And, in addition to its online casino and bingo app, Penn is also a major player in Barstool Sports.
Although Barstool is not a betting platform per se, it is a name closely associated with sports. Penn National Gaming has successfully leveraged the brand to make some of its casinos major sports betting destinations, and more are on the way. In the meantime, the Barstool name is being used to grow Penn’s sports betting business.
That matters more than most investors realize. While most consumers support the idea of legalizing sports betting, the American Gaming Association notes that only just over half of US states actually allow it. And, of those that do, the company itself remains relatively anemic; much more needs to be done to educate consumers and improve products. Market research firm Technavio says the global sports betting market is expected to grow 10% per year through 2025, reaching $100 billion more than it currently is by the end of this year. period.
Finally, add Enphase Energy (NASDAQ: ENPH) to your list of S&P 500 stocks to buy while they’re down.
It’s not exactly a household name. Don’t let its darkness fool you, though. Enphase is a key player in the solar sector, and perhaps a better opportunity than solar panel manufacturers or solar power producers. This is because the company does not manufacture solar panels. Instead, it manufactures the microinverters that convert the sun’s rays into actual electricity. Its IQ8 microinverter is perhaps the best in the world, in fact, seamlessly managing the transition from grid power to rooftop system electricity, optimizing solar panel installations.
Combined with Enphase’s IQ Battery, these “smart” systems fulfill the promise of solar power that has been mostly unrealized until now. Consumers as well as businesses certainly seem to be loving the technology, with last year’s revenue growing in the range of 40%, leading to an almost 70% increase in earnings per share. Revenue this year is expected to improve by more than 43%.
This background and outlook hasn’t helped lately. Enphase shares are down 40% in the past three months, possibly due to uncertainty over the political support (and tax incentives) that helped usher in the age of solar energy.
It is a doubt that is not necessary, however. Solar power has a lot of support with or without renewed government policy. In fact, the US Energy Information Administration estimates that solar power will account for nearly half of the nation’s power generation capacity additions this year. In the longer term, the share of solar energy in total electricity generated in the United States is expected to increase from 5% this year to 20% by 2050, again according to the United States EIA. Other countries are experiencing similar adoption rates.
All of this, of course, bodes well for Enphase Energy.
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. James Brumley has no position in any of the stocks mentioned. The Motley Fool owns and recommends Meta Platforms, Inc. and Twitter. The Motley Fool has a disclosure policy.