Investors often get excited when quality stocks trade near their 52-week lows. The logic is simple: if a strong business falls far enough, it could become an attractive opportunity.
Still, not every stock at a yearly low is worth buying. Some businesses face real problems that justify lower valuations.
In a YouTube video, Mark Roussin, CPA, examined four stocks trading near their 52-week lows: Mastercard (MA), Uber Technologies (UBER), Chipotle Mexican Grill (CMG), and Nu Holdings (NU). His focus was not on the stock price decline itself, but on whether the underlying businesses remain healthy despite weaker investor sentiment.
Mastercard was ranked as the highest-quality business on the list. Shares are down about 17% over the past year despite record transaction volume of $10.9 trillion, operating margins of 58%, and free cash flow reaching $17.8 billion.
Investor concerns center on slower consumer spending, economic uncertainty, and competition from stablecoins and alternative payment systems. Even so, the company’s digital payment network continues expanding as cash usage declines globally.
Uber was the second stock on the list. Its shares have fallen about 16% over the last year, even with record gross bookings above $200 billion annually. Revenue, operating profit, and free cash flow keep going up.
Investors still worry about robotaxi competition and a slow economy. But Uber’s network of drivers and riders, plus its expanding set of services, keeps pushing the business forward.
Chipotle has been one of the hardest hit names. The stock is down roughly 40% over the last year. People are nervous about what customers are spending and whether growth can last. But despite those worries, Chipotle keeps opening new stores.
Management wants to have 7,000 restaurants across the US and Canada. The stock is also cheaper than usual, trading at about 21 times forward earnings.
The last stock was Nu Holdings, one of the biggest digital banks in Latin America. Nu now has about 135 million customers and keeps putting up strong revenue growth.
The company made roughly $12.5 billion in revenue over the last year and trades at about 11 times forward earnings. Roussin called Nu the riskiest stock on his list, but also the one with the most upside if the company keeps executing well.
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News Pushing Stock Prices Today
Markets got hit again as tech stocks gave back Monday’s gains. The iShares Semiconductor ETF fell nearly 6%, and the PHLX Semiconductor Index dropped 7%. That wiped out all the gains from earlier in the week. Micron lost over 6%, and Broadcom fell more than 4% as investors pulled money out of chip stocks.
Apple also weighed on the market. Shares dropped over 3% after investors reacted with a shrug to the latest Apple Intelligence news. Expectations were high going into the event, but the market’s response was quiet, and that added to the weakness across tech.
Outside of tech, a few stocks made big moves. Nuvalent, a small biotech company, jumped 32% to $123 on volume of over 46 million shares. People are talking about a possible buyout and feeling good about its drug development. J.M.
Smucker gained nearly 11% to $111.50 after forecasting earnings growth of 7% to 12% for the coming year. United Natural Foods went the other way, falling nearly 13% to $45.50. It matched earnings expectations, but investors focused on revenue problems and a very small increase in its outlook.
Stocks near their 52-week lows can sometimes be good deals. But a low price by itself is not a good enough reason to buy. Investors should look at the business itself, how much cash it makes, what gives it an edge over competitors, and whether the price makes sense.
Among the four names discussed, Mastercard and Uber stand out for their quality. Nu Holdings may offer the most upside. The big question is whether the market has become too negative on these companies, or if the worries are actually fair.
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