From homes and cars to groceries and gas, everything is more expensive these days. Well, not everything.
Stock prices have come down considerably. Inflationary pressures and mounting fears of a recession have the market on the brink of bear market territory. The major averages are stringing together weekly losing streaks that haven’t been seen for decades. In the process, companies have seen billions of dollars shed from their valuations.
Investors with the nerve to get in front of this moving train are faced with the challenge of distinguishing the bargains from the has-beens. A stock trading under $20 may seem to be a great buy but could easily slip below $10 if it lacks a proper growth catalyst. Other stocks may never again see sub-$20 prices.
These three long-term winners have dipped to levels that make them attractive buys. With the growth drivers in place to build a sustained recovery, their shares can now be had for less than an Andrew Jackson bill.
Is Wolverine World Wide Stock a Buy ?
A year ago, Wolverine World Wide, Inc. (NYSE:WWW) was trading in the $40’s. The footwear company was reporting strong financial performances quarter after quarter. Shoppers were scooping up popular sneaker, boot, sandal, and slipper brands like Patagonia, Saucony, and Sweaty Betty. Then the other shoe dropped.
Higher expenses tied to wage increases and materials began to weigh on margins. The impact of supply chain disruptions on inventory didn’t help. Earlier this month Wolverine shares dipped as low as $16.65 and are now trying to claw their way back.
The good news is that the company doesn’t have a demand problem. As with automobiles, some people may be trying to get more mileage out of their current footwear amid persistent inflation pressures. But over time as consumer confidence improves, loyal customers will return to spruce up their footwear collections with their favorite Wolverine brands.
Wolverine reported a strong first quarter that showcased 20% top-line growth and booming e-commerce business. Rest assured it is on solid footing to continue growing as the economic recovery unfolds.
Why is Lyft Stock Down?
Lyft, Inc.’s (NASDAQ:LYFT) plunge below $20 has returned the stock to its pandemic lows. It is effectively priced as if everyone is staying indoors and nobody is using ride-hailing services. But we know that’s not the case.
In fact, Lyft’s swing to profitability in the first quarter was driven by increases in both active riders and ride volume. The main issue with Lyft, however, has been high gas prices and the effect they are having on boosting its driver ranks.
To attract more drivers, Lyft will have to spend more on driver incentive programs that make prospective contractors forget about the drawbacks at the pump. Eventually, these programs should attract more drivers and improve the availability of Lyft’s ride-hailing services nationwide.
Because Lyft has a supply problem rather than a demand problem, investors can feel more comfortable hitching a ride at the current depressed level. The challenges tied to inflation are likely to pass and allow what is a strong business model and market leadership position to perform. With demand stabilizing and profits percolating, a recovery in Lyft shares is right around the corner.
Will Host Hotels & Resorts Stock Go Up?
Host Hotels & Resorts, Inc. (NASDAQ:HST) is a bit of a different case having traded below $20 prior to the pandemic before sliding as low as $8 in March 2020. Earlier this month, shares of the hotel operator climbed to their highest level since 2018. They have since slid back under $20, offering investors an opportunity to jump on the recovery bandwagon.
Momentum is on the Host’s side for a host of reasons. Its 78 mostly domestic properties are sought-after destinations for pent-up traveler demand. The resumption of in-person business conferences is also bringing traffic back to its hotels.
And it's not just the fact that more people are roaming its halls, restaurants, and lounges. People are also spending more. RevPAR, a key hotel industry measure of revenue per available room, reached a post-pandemic high of $167 during the first quarter amid higher room rates and vacationers’ eagerness to pay for some much-needed R&R.
Just as hotel traffic has resumed so too has the company’s issuance of quarterly dividend payments. Last quarter management bumped the dividend to $0.06 per share, which equates to a 1.3% forward yield. Not a huge income generator but a company that has come a long way over the last couple of years and has vacancies for further dividend hikes.
Host’s business hotels and coastal resorts are alive again and its stock is rejuvenated as well. After peaking above $21 it has been dragged lower by border market weakness. It is trading at the lower Bollinger band on the daily chart, an area that it has repeatedly bounced from over the past six months. This could be the Host’s final trip for under $20—and a good opportunity for investors to book a reservation.
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