A Bull Market Is Here: 2 Super Stocks Down 21% and 30% to Buy Right Now

Source The Motley Fool

Even with the recent bout of market volatility, 2024 has been a fantastic year for stocks. The S&P 500 index has delivered a dividend-adjusted total return of roughly 25% across this year's trading. Meanwhile, the more growth-heavy Nasdaq Composite index has delivered a total return of 30%.

This year's performance has marked one of the most impressive annual bull runs in stock market history, and major indexes have managed to notch new highs at multiple points across the stretch. But while many stocks now trading at or near record highs could continue to march higher next year and beyond, investors shouldn't overlook some great companies that have been relative underperformers lately. Read on to see why two Motley Fool contributors think that investing in these stocks is a smart move right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »

Uber is serving up great growth and is attractively valued

Keith Noonan: Uber Technologies (NYSE: UBER) is the leader in the ride-hailing market, and it's been serving up some pretty impressive sales and margin growth. On the other hand, it's facing the risk of potential disruption from companies including Tesla and Alphabet's Waymo subsidiary. The company's revenue increased 20% year over year to $11.2 billion in the third quarter, and operating income increased 169% year over year to $1.06 billion.

The threat posed by self-driving taxis operated by larger and more resource-rich competitors has caused the market to reassess the company's stock. Its share price is currently down roughly 30% from its high.

On the heels of the big sell-offs, Uber is now valued at roughly 21 times this year's expected earnings -- a level that looks attractive given its strong sales and earnings growth. In fact, the company now has a forward price-to-earnings growth (PEG) ratio of roughly 0.1. For reference, a PEG ratio of less than 1 is often taken as a sign that a business is undervalued, because its share price has increased at a relatively slow rate compared to its earnings.

While autonomous vehicle companies including Waymo and Tesla do pose a significant competitive threat, it's not like Uber is standing still in the category. Uber's large and highly engaged user base gives it some natural advantages in the space, and the company is already working with other autonomous vehicle manufacturers to bring robotaxis to its platform. Uber has also built up a wealth of valuable data that can be used for training artificial intelligence models and improving the value of its ride and food-delivery services as new automation initiatives are deployed.

With the business still serving up impressive performance and the market seemingly underestimating its growth potential, Uber stock is a smart buy right now.

This Johnson & Johnson spinoff is a value stock opportunity

Lee Samaha: The self-care (Tylenol, Calpol), skin health and beauty (Neutrogena, Aveeno) and essential health (Listerine, Band-Aid) company Kenvue (NYSE: KVUE) has had a disappointing start as an independent entity. Its stock is slightly down in 2024, and down 21% overall since its spinoff from Johnson & Johnson in 2023.

That said, there's a compelling value case for the stock, and well-regarded value investing company Starboard Value is on board. As is often the case with Starboard investments, the proposition involves investing in a stock trading on a valuation discount to its peers due to an operational underperformance that could be improved with better execution. The benefit of doing the latter is an improvement in earnings and a valuation expansion to at the least the level of its peers.

As you can see below, its forward enterprise value (market cap plus net debt) to earnings before interest, taxes, depreciation, and amortization (EBITDA) multiple is significantly discounted to most of its peers.

KVUE EV to EBITDA (Forward) Chart

Data by YCharts.

In this case, it's not hard to see what Kenvue needs to do: Improve sales growth and margins in its skin health and beauty businesses.

Q3 2024 Self Care Skin Health & Beauty Essential Health
Sales $1.63 billion $1.07 billion $1.2 billion
Adjusted operating income $557 million $191 million $291 million
Organic sales growth (YOY) 0.7% (2.7%) 4.5%
Volume growth (YOY) (1.1%) (4.7%) 0.8%

Data source: Company presentations. YOY = Year over year

Management is fully aware of the issue and is devoting marketing resources (marketing spend is due to increase by 20% this year) to the issue in a way that it might not have been able to under the umbrella of Johnson & Johnson.

The opportunity is significant because, as Starboard notes, the skin health and beauty industry category is growing at a mid-single-digit rate, and competitors have taken market share.

As such, if Kenvue's marketing investments work out, the stock has substantive potential upside.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $349,279!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $48,196!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $490,243!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 16, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Colgate-Palmolive, Kenvue, Tesla, and Uber Technologies. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
The $589 XRP Dream: Believers Aren’t ‘Delusional’ Enough, Expert SaysA known market analyst sees the $6 per coin prediction for XRP crypto being claimed by some experts as too conservative.
Author  NewsBTC
Dec 17, Tue
A known market analyst sees the $6 per coin prediction for XRP crypto being claimed by some experts as too conservative.
placeholder
Nvidia vs. Broadcom: Which Is the Better AI Chip Stock to Own in 2025?When it came to artificial intelligence (AI) infrastructure in 2024, Nvidia (NASDAQ: NVDA) reigned supreme.
Author  The Motley Fool
Dec 19, Thu
When it came to artificial intelligence (AI) infrastructure in 2024, Nvidia (NASDAQ: NVDA) reigned supreme.
placeholder
Crude Oil set for weekly loss as Fed cuts off any rally attemptOil prices saw recovery attempts fail and edges lower for the fifth consecutive day on Friday.
Author  FXStreet
Dec 20, Fri
Oil prices saw recovery attempts fail and edges lower for the fifth consecutive day on Friday.
placeholder
US Dollar hits fresh two-year high ahead of PCE inflationThe US Dollar (USD) retreats slightly on Friday, with the DXY Index trading at around 108.20 after eking out another fresh two-year high of 108.55 during the Asian-Pacific trading session. The move was supported by rising US Treasury yields, widening
Author  FXStreet
Dec 20, Fri
The US Dollar (USD) retreats slightly on Friday, with the DXY Index trading at around 108.20 after eking out another fresh two-year high of 108.55 during the Asian-Pacific trading session. The move was supported by rising US Treasury yields, widening
placeholder
Is Google’s quantum tech Willow a threat to Bitcoin’s security?Google just dropped Willow, a quantum chip that redefines what “fast” and “accurate” even mean. This isn’t your typical tech innovation. Willow can perform calculations in under five minutes, which would take the fastest supercomputers 10 septillion years to crack. That’s 10,000,000,000,000,000,000,000,000 years. Let that sink in. But while tech enthusiasts are celebrating, Bitcoin holders […]
Author  Cryptopolitan
14 hours ago
Google just dropped Willow, a quantum chip that redefines what “fast” and “accurate” even mean. This isn’t your typical tech innovation. Willow can perform calculations in under five minutes, which would take the fastest supercomputers 10 septillion years to crack. That’s 10,000,000,000,000,000,000,000,000 years. Let that sink in. But while tech enthusiasts are celebrating, Bitcoin holders […]
goTop
quote