As a rule of thumb, investors should avoid targeting companies that have suffered steep losses. You might think that circumstances can’t get any worse. Unfortunately, such a concept isn’t written into law. Public enterprises that have hemorrhaged red ink can hemorrhage even more. Still, focusing on select stocks with largest 52-week losses could lead to shrewd gains.
One strategy to deploy is to concentrate on large-capitalization firms or entities that have established brands and businesses. Sure, you can always buy cheap equities cheaply. However, the problem is that unproven entities are by nature unpredictable. When going after the larger companies, contrarian don’t have guarantees. Nevertheless, they have a better chance of the odds favoring them.
Second, it’s important to consider relevant businesses. If you go after sectors or industries that are struggling for traction, chances are, you may incur more losses. By being smart and approaching promising ideas, you have a better shot of successfully catching a falling knife. With that said, below are stocks with the largest 52-week losses.
CAE (CAE)
A global leader in training protocols for the civil aviation, defense and healthcare sectors, CAE (NYSE:CAE) brings a wealth of knowledge to the table. In particular, the company is widely known for its simulation training solutions, such as flight simulators and other training devices for pilots and aviation professionals. As society normalizes from the Covid-19 crisis, increased demand for air travel could boost CAE stock for the long haul.
However, this narrative is taking a long time to materialize as it’s one of the stocks with the largest 52-week losses. Specifically, in the trailing year, CAE incurred a hit of more than 21% in equity value. Still, analysts rate shares a consensus moderate buy and I believe for good reason.
For example, while it’s not financially remarkable, it posted an average earnings per share of 21 cents in the past four quarters. This figure beat the collective consensus view by a penny. Also, it’s worth pointing out that CAE stock trades at 1.85X trailing-year sales. In the past year, this metric stood at 2.29X.
By year’s end, analysts see EPS rising by 5% to 85 cents. On the top line, sales could move up 5.8% to $3.29 billion. It’s not exciting but it gets the job done.
Las Vegas Sands (LVS)
A leading global developer and operator of integrated resorts and casinos, Las Vegas Sands (NYSE:LVS) owns several compelling properties. In particular, the company’s Macau and Singapore operations could be attractive for contrarian investors of stocks with largest 52-week losses. That’s because the dollar is relatively strong compared to many other international currencies. Therefore, it makes sense for American tourists to travel abroad.
To be fair, that hasn’t helped the immediate narrative of LVS stock. Since the start of the January, the equity dropped 23%. In the trailing year, it’s down nearly 34%. Still, investors should note that the company usually delivers the goods. In the past year since the second quarter, Las Vegas Sands posted an average EPS of 61 cents. This figure beat the consensus view of 58 cents.
Right now, shares trade at 2.61X trailing-year sales. That’s a relative discount to the prior year’s average metric of 5.96X. Even better, for fiscal 2024, analysts believe EPS could rise 34.39% to $2.54. On the top line, revenue could hit $11.54 billion, up 11.2%.
Ulta Beauty (ULTA)
One of the riskiest ideas among stocks with largest 52-week losses, Ulta Beauty (NASDAQ:ULTA) is also among the most compelling. It’s a powerhouse in the beauty retail market, offering a wide range of products, including cosmetics, skincare, fragrance and haircare. In addition, Ulta stores offer salons, making it truly a one-stop shop.
Fundamentally, Ulta is attractive because of the normalization process. While Covid forced people to quarantine, that dynamic is no longer relevant. Plus, people aren’t scare of the SARS-CoV-2 virus anymore. They’re also going out on vacation, which means there’s an extra incentive on looking good. Theoretically, this framework should benefit ULTA stock.
Unfortunately, shares have struggled throughout the past year. Nevertheless, the red ink could spell opportunity. ULTA stock trades hands at 1.59X trailing-year sales, below the prior year’s average of 2.17X.
For the current fiscal year, analysts see sales rising to $11.55 billion, up 3%. In the following year, the top line could hit $12.22 billion, up nearly 6%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.