Despite a thriving U.S. stock market, some companies are experiencing downturns. Stocks like United Parcel Service (UPS), Novo Nordisk, and Adobe have each dropped over 20% this year. However, these stocks present substantial upside potential, making them worthy of consideration for long-term investment.
1. United Parcel Service (UPS)
UPS is a key player in the logistics sector. It has seen a decline of 24% in its stock price this year, with current trading around $99.64. This is significantly lower than the S&P 500 average price-to-earnings (P/E) ratio of 25, as UPS now trades at a P/E of under 15.
- Market Cap: $85 Billion
- Dividend Yield: 6.58%
- Gross Margin: 18.48%
- Current Price Change: +2.75% ($2.67)
While tariffs and a slowdown in global trade pose challenges, these issues are expected to stabilize. UPS’s management has strategically reduced its package volume for Amazon to enhance profitability, emphasizing a balanced approach between revenue and profits.
2. Novo Nordisk
Novo Nordisk, a leading drug manufacturer, has encountered a 45% reduction in stock value this year. The resignation of its former CEO and lowered sales guidance have prompted investors to shift focus to competitors like Eli Lilly.
- Market Cap: $165 Billion
- Dividend Yield: 3.52%
- Gross Margin: 81.93%
- Current Price: $49.07 (Change: +5.85% / $2.71)
Trading at a P/E ratio of just 13, Novo Nordisk’s valuation looks favorable, given its robust growth potential. Sales from its leading products, Wegovy and Ozempic, increased by 15%, not accounting for currency fluctuations. Ongoing legal actions against compounding pharmacies are expected to enhance their market position in the long term.
3. Adobe
Adobe has also seen its stock price drop 24% this year, currently trading at approximately $343.66, with a P/E ratio of 21. Past years have seen this stock command much higher multiples, causing concern over its future growth amidst increasing competition from AI-based editing tools.
- Market Cap: $144 Billion
- Gross Margin: 88.43%
- Current Price Change: -0.19% (-$0.66)
Despite these challenges, Adobe’s flagship product, Photoshop, remains in high demand, thanks to its advanced features. The company recently reported record revenues, showing an 11% increase to $6 billion for its latest quarter.
Conclusion
While UPS, Novo Nordisk, and Adobe face short-term obstacles, their long-term growth prospects are promising. Investors should consider these incredibly affordable stocks for potential gains as market conditions improve.
