Affordable top-tier stocks found at their lowest price in years.
In contrast to the record highs on the stock exchanges, several quality stocks are trading close to their own yearly lows, potentially presenting a buying opportunity for long-term investors. Among these, Diageo's stock stands out as particularly intriguing.
Although the S&P500 and DAX are flirting with their 52-week highs, some solid quality titles are teetering on the brink of falling below their own respective yearly lows. Nevertheless, these companies' strong business models have shown minimal change, making them attractive for investors seeking potential buying opportunities or bargains.
Among the seven stocks currently trading near their 52-week lows:
- Microsoft: 3.2% performance over the past year
- Novo Nordisk: -34.2%
- Diageo: -24.8%
- Lockheed Martin: 3.6%
- AMD: -33.2%
- Kering: -34.3%
- Procter & Gamble: 6.4%
Diageo, in particular, is worthy of attention due to its current P/E ratio of 16.97, which is around 28% lower than the average of the past five years. Concurrently, the dividend yield is 3.77%, representing a 61% increase compared to the same period's average.
Moreover, analysts are recommending the purchase of Diageo (WKN: 851247), with 17% upside potential predicted. Experts now deem concerns about sales problems and weak growth, which led to exchange volatility, as less worrisome, contributing to this positive sentiment.
Although Diageo's financial performance has shown slight declines in revenue and earnings, the company's robust brand portfolio, focus on margins and cost savings, and management's goal of achieving $3 billion in free cash flow by 2026, support dividend growth and stock buybacks. This, coupled with its reasonable valuation, higher-than-anticipated yield, and potential for future growth, render Diageo an interesting option for long-term investors.
However, macroeconomic risks such as regulatory changes, potential tariff hikes, and global economic uncertainty must be monitored. A fundamental turnaround should also be closely watched for by investors before committing to the stock.
Investors looking for potential buying opportunities in the stock-market may find Diageo appealing, considering its current trading price is close to its yearly low and offers a dividend yield that's 61% higher than the average of the past year. Furthermore, analysts suggest that Diageo could offer up to 17% return on investment, making it an attractive choice for those interested in finance and investing.
