Is Now the Time to Buy the 3 Worst-Performing Stocks in the S&P 500 This Year?

Heading into trading on Monday, the S&P 500 was down around 5% to start 2025. Investors are worried about what lies ahead for the economy, and as a result, stocks have been in a free fall.

The three worst-performing stocks on the broad index as of Monday were Deckers Outdoor (NYSE: DECK), Tesla (NASDAQ: TSLA), and On Semiconductor (NASDAQ: ON). Are these beaten-down stocks worth buying today, or should investors hold off on doing so? Here's a closer look at each one of them and why they may or may not be able to recover.

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1. Deckers Outdoor: -46%

The S&P 500 stock down the most after the first quarter of 2025 is Deckers Outdoor, a footwear company that is struggling mightily despite posting what seemed to be decent results in its most recent quarter. Although it generated 17% revenue growth during the last three months of 2024, with net sales coming in at $1.8 billion, analysts simply weren't thrilled with its guidance, even though it is projecting 15% in top-line growth this year.

Investors are concerned about the economy as a whole, and for a shoe stock that was recently trading at more than 35 times its trailing earnings, it may have been difficult to justify buying Deckers, even despite its strong quarterly numbers. Now, the stock trades at a more modest multiple of about 18 times trailing earnings.

While it's a cheaper stock to own, I wouldn't rush to buy this one just because the economy is on shaky ground right now. Trade wars and tariffs could weigh on Deckers' business in the months ahead, and there's a risk its guidance could be cut.

2. Tesla: -38%

In the second spot on this list is Tesla, which is doing poorly due to its questionable growth prospects and also as a result of its CEO Elon Musk and his close relationship with President Donald Trump -- and the government cuts Musk has been behind, which consumers and analysts have not been happy about. There have been protests at Tesla dealerships, and the fallout could weigh heavily on the business.

The company was already struggling with shrinking margins and rising competition even before all of this. Tesla's automotive revenue fell by 8% for the final three months of the year, down to $19.8 billion. Profits of $2.3 billion also declined by a staggering 71% year over year.

Unfortunately, things look to be going from bad to worse for Tesla, which is why I'd still stay away from the electric vehicle maker's stock. At more than 90 times its estimated future earnings, this is still a highly expensive stock to buy -- it has a lot more room to fall.

3. On Semiconductor: -36%

On Semiconductor, which does business as onsemi, is the third-worst-performing stock on the S&P 500 at the time of writing this article. The semiconductor company generates the bulk of its revenue from the automotive sector, which can make it vulnerable to the same economic headwinds that are affecting Tesla and other electric vehicle makers, including tariffs.

That's concerning when you consider its results for 2024 weren't impressive, as sales totaled $7.1 billion and declined by 14% year over year. Given the current macroeconomic challenges, a recovery may not happen quickly for onsemi.

But with a relatively modest valuation -- it trades at 16 times next year's estimated earnings -- it could be the best buy on this list, assuming you're willing to be patient with the business.

The opportunities for semiconductor companies are significant, and while onsemi is struggling today, its long-term growth prospects are promising not just in the automotive sector but in others as well. The stock is trading at multiyear lows (it hasn't been at these levels since 2021), and while a turnaround may not be imminent, this can potentially be a good long-term buy.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Deckers Outdoor and Tesla. The Motley Fool recommends ON Semiconductor. The Motley Fool has a disclosure policy.