Value investors who missed out on the S&P 500’s (SPY) 14.21% return in the first half of 2024 may expect a market correction. Without a negative catalyst like hyperinflation or the Fed raising rates, that scenario is unlikely. Instead, the sell-off is company-specific. Investors are panic-selling weak firms.
Two stocks on sale are both in the retail sector. Nike (NKE) lost 19.98% on June 28, 2024, after it reported an adjusted profit of $1.01 a share. That still implies a premium price-to-earnings ratio on NKE stock. CEO Matthew Friend said the firm updated its fiscal 2025 outlook after revenue fell by 2% in the quarter. Nike’s footwear sales fell by 6%. While equipment sales increased by 47%, it did not offset the weak revenue results.
Nike is a multi-year turnaround story. Give the company 2-3 years to fix its business.
In the drugstore sector, Walgreens (WBA) said it would need to cut many poor-performing stores. It will also refrain from investing in the primary-care business. Expect the firm to close stores that suffer from high theft rates.
New CEO Tim Wentworth has significant restructuring tasks ahead. He will need to undo the work of Walgreens’s former CEOs.
Related Stories
