just because he Dow Jones Industrial Average (DJINDICES: ^DJI) being packed with blue-chip stocks doesn’t mean it’s immune to sell-offs. The index is nearly 7% below its January high, and at one point last month it was down as much as 12% from that high. It also looks like it’s trying to retest last month’s low, and for a handful of Dow names, the last three months have been even worse.
If you’re an experienced investor, you know that these weak moments are ultimately buying opportunities. You can’t keep up a good deed forever. To that end, here’s a rundown of three of the Dow’s worst-performing stocks of late. Each one is ready to bounce back for all the right reasons.
1. Goldman Sachs
In comparative terms, the subscription (initial public offering) the market feels lackluster here. A combination of inflation and the Russian invasion of Ukraine is taking its toll on the economy. Y the market, causing some companies to postpone planned public offerings and other negotiations. EY (formerly called Ernst & Young) estimates that total first-quarter initial public offerings fell 37% from year-earlier levels, while the total amount of money raised through public offerings fell 51%.
People are also reading…
This dry IPO market took a big bite out of Goldman Sachs‘ (New York Stock Exchange: GS) bottom line too. Although its first-quarter revenue and profit beat analyst estimates, that pleasant surprise was provided by the strength of its trading and wealth-management arms. Investment banking revenue fell 36% year-over-year, leading to a 48% decline in net profit. Despite the pace, torn investors simply let stocks drift in the wake of the news, trying to figure out if this is the shape of things to come.
All of these numbers, however, paint a misleading picture of the current underwriting market, as well as of Goldman Sachs stock’s troubles.
Reality: The first-quarter IPO drop isn’t a drop at all. It only compares with the first quarter of 2021, in which a large number of public offerings postponed by the pandemic finally materialized. As EY noted a year ago, IPO activity in the first quarter of 2021 was the most feverish in 20 years. And that force persisted. EY adds that fourth quarter public offerings reached levels not seen since the last quarter of 2007, capping what would be an unprecedented year for IPOs.
That’s a tough act to follow.
At the same time, while the 24% pullback has been painful for Goldman shareholders, most of the 227% rally from the March 2020 low to last November’s high is still intact.
Don’t let a little profit taking now lead you to the wrong conclusion here. Goldman Sachs is expected to start growing again next year. The stock may start to recover long before that date.
Microsoft (NASDAQ: MSFT) Stocks are another victim of overly euphoric success amid the COVID-19 pandemic, setting the stage for profit-taking now that the effect of the coronavirus contagion has been curbed. Specifically, after a 165% rise between the beginning of 2020 and the end of 2021, the stock is now 18% below that peak.
The optimism is completely understandable. With millions of employees suddenly forced to work from home, employers needed online collaboration solutions fast. In addition to its popular office productivity software, Microsoft also offers online video/voice conferencing, security, and other options remote workers need. Now that the pandemic is fading (or being ignored), however, investors fear that companies are reconsidering the need for all these work-at-home options.
The thing is, most of Microsoft’s business doesn’t rely heavily on home-based employees. Regardless of where they work, employees need access to software like Excel or Word. And while they don’t necessarily need them as desperately as they did a year ago, many businesses are holding on to their online communication and collaboration tools, just in case an unexpected outage hits in the future.
It doesn’t even matter that a large part of Microsoft’s business comes from hybrid cloud platforms, video games and operating systems. For the most part, these are not affected by where the workers are actually doing their work.
This recent weakness is an opportunity to take advantage of Microsoft stock in the face of what analysts say will be 18% sales growth this year and 14% next year.
Finally add Nike (New York Stock Exchange: OF) to his list of hit Dow Jones stocks that could be ripe for a reversal.
It is not a name that needs much introduction. Nike, of course, is the most recognized sportswear brand in the world, with estimates suggesting that it controls between 40% and 60% of the global sports footwear market. Even at the low end of the range, that’s huge.
This domain has not impressed investors much lately. Stocks are down almost 30% from all-time highs reached in December, with the resurgence of the pandemic and new geopolitical tensions, particularly tensions involving China, crippling supply chains and straining ties with a key market. for Nike; about 20% of its sales are made in that market.
Yet for all its challenges, Nike has more work going for it than against it.
His continual shift toward more self-sufficiency is one of the things that works for him. More than a third of its revenue now comes from sales made directly to consumers, bypassing third-party retailers that eat up profit margins. Another advantage that Nike enjoys is its ability to innovate. Not that it really needs it, but the company recently confirmed that it will open a new technology center in 2023 that will, among other things, think about ways to improve its customer experiences using artificial intelligence. Nike has already changed the athletic footwear game by allowing consumers to build their own sneakers through a platform called Nike By You.
Stocks may need some time to flourish again, but it will be It’s worth the wait.
10 Stocks We Like Better Than Goldman Sachs
When our award-winning team of analysts has stock advice, it’s worth listening to. After all, the newsletter they have published for over a decade, Motley Fool Stock Advisorhas tripled the market.*
They just revealed what they think are the top ten stocks for investors to buy right now…and Goldman Sachs wasn’t one of them! That’s right, they think these 10 stocks are even better buys.
*Stock Advisor returns from April 7, 2022