Stocks at 52-week low: Values ​​or traps?

• (0:30) – Can you find value in fallen stocks hitting new lows?

• (5:30) – Tracey’s top stock picks for your watchlist

• (29:00) – Episode summary: NKE, DE, PAYC, ETSY, LVS

• [email protected]

Welcome to episode #374 of the Value Investor Podcast.

Every week, Tracey Ryniec, editor of Zacks Value investor portfolioshares some of her best value investing tips and stock recommendations.

While many stocks are making new 52-week highs, there are always some that are going in the opposite direction and making new 52-week lows.

You can search for stocks trading at their 52-week lows using Zacks.com’s basic screener. Tracey ran this screen without any other metrics. She didn’t even include the Zacks Rank.

This resulted in 450 stocks trading AT their lowest levels.

That’s a lot of stocks. And among them were a dozen popular, well-known companies.

Are there any bargains in these stocks? Or are they traps?

What is the difference between a value stock and a trap?

Remember, a value stock is defined not by its share price, but by its valuation. They typically have low P/E and P/S ratios, among others. But many stocks can qualify by this metric.

A cheap stock becomes a trap when earnings are expected to fall. Value investors want cheap stocks that still have earnings expected to rise. In fact, all investors should want stocks with rising earnings.

But it’s rare for a stock to come close to a 52-week low AND still see earnings growth.

5 stocks at their 52-week low: values ​​or traps?

1. Nike, Inc. (NKE)

Nike shares have fallen to a multi-year low as business continues to be sluggish following the pandemic. Nike has hit a 52-week low, but is also down 17.6% over the past 5 years. That’s well below the S&P 500, which is up 86% over the same period.

Even after the share price crash, Nike is not that cheap. The company is trading at a price-earnings ratio of 23 and a price-to-sales ratio of 2.2. Neither of these is a “value.”

Should value investors be patient with Nike?

2. Deere & Company (EN)

Deere has traded in a tight trading range for the past three years, but recently hit its 52-week low. Deere shares are down 8.5% year-to-date, but are up 121% over the past 5 years.

Deere actually has value characteristics with a P/E ratio of just 13.9. It also pays a dividend and yields 1.7%.

Is Deere a value or a trap?

3. Paycom Software, Inc. (PAYC)

Paycom Software is a provider of cloud-based HR and payroll software. Software stocks have been declining in demand, and that goes for Paycom too. Shares have fallen 27.8% year-to-date and are also at a 5-year low, down 38.7%.

The story goes on

However, Paycom has no debt and pays a dividend that currently yields 1.1%. It is also a rare Zacks Rank #1 (Strong Buy) stock that is also trading at its 52-week low. There is a disconnect with Wall Street.

Is Paycom software a value or a trap?

4. Etsy, Inc. (ETSY)

Etsy was a big winner during the pandemic as people bought homemade masks and other items for living and working at home. But Etsy shares have given up their pandemic-led rally. Over the past five years, the stock has now fallen 6.6%, while the S&P 500 has risen 86% over the same period.

Etsy isn’t cheap. It has a PEG ratio of 4.5. Etsy also doesn’t pay a dividend.

Is Etsy a value or a trap even at its lowest point?

5. Las Vegas Sands Corp. (I AGAINST)

Las Vegas Sands owns resorts in the U.S. and Asia. Shares hit a new 52-week low in July 2024 and have lost 13% year-to-date. Over the past 5 years, Las Vegas Sands has also lagged, losing 33.4%.

Las Vegas Sands is cheap, with a PEG ratio of 0.7. It also pays a dividend, which helps with patience, and currently yields 1.9%.

Is Las Vegas Sands a Value or a Trap?

What else should you know about stocks at 52-week lows?

Tune in to this week’s podcast to find out.

Want the latest recommendations from Zacks Investment Research? Download the 7 best stocks for the next 30 days today. Click here to get this free report

NIKE, Inc. (NKE): Free Stock Analysis Report

Deere & Company (DE): Free Stock Analysis Report

Las Vegas Sands Corp. (LVS): Free Stock Analysis Report

Paycom Software, Inc. (PAYC): Free Stock Analysis Report

Etsy, Inc. (ETSY): Free Stock Analysis Report

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