Yahoo Finance 2 Great Stocks to Buy Now at Huge Discounts Heading into June
The Nasdaq and the S&P 500 touched new all-time highs on Thursday, before giving up those gains. Most are still calling for a boring march higher this summer as the remaining market bears wave the white flag.
That said, the market is looking a tad overheated in the near term and so are tons of stocks. Thankfully, a handful of strong S&P 500 stocks look ripe for the picking at their current levels.
Today’s episode of Full Court Finance dives into where the stock market stands heading into Memorial Day, and why it might be time for investors to look for deals.
The two stocks we explore—Lululemon (LULU) and Global Payments (GPN)—are trading at prices and valuations that could look like steals years or even months from now.
Lululemon (LULU)
Lululemon stock is the worst S&P 500 performer in 2024 after Wall Street dumped the stock on ‘slowing growth.’ LULU has tanked 42% YTD after hitting all-time highs to close 2023. The company that changed the way millions of people dress and inspired everyone from Target to Nike (NKE) to roll out copycat offerings is now down 7% over the last three years.
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Lululemon is still up 560% in the last decade to roughly triple the S&P 500 and blow away Nike’s 140%. This is part of a 4,600% climb during the past 15 years.
Lululemon stock appears to be finding support near its lows over the last four years while trading at its most oversold RSI levels this decade after sitting near its most overbought at the end of 2023.
LULU trades 56% below its average Zacks price target and at a 71% discount to its 10-year highs at 20.4X forward earnings. Despite soaring 560% over the last decade, LULU trades near its 10-year lows in terms of forward earnings, which marks a discount to the S&P 500 and Nike’s 23.5X.
Lululemon also boasts a stellar balance sheet with no debt, alongside $2.2 billion in cash and equivalents, $7.1 billion in total assets, and $2.9 billion in liabilities.
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LULU tanked in 2024 because of slowing growth compared to its 30% average revenue expansion during the trailing three years and 25% or higher earnings. Still, LULU is projected to post 12% sales growth in 2024 and 11% higher revenue next year to reach nearly $12 billion to help boost its bottom line by 11% and 12%, respectively.
Lululemon’s higher-income shoppers are able to power it through various economic conditions. Lululemon still expects to double sales between 2021 and 2026, driven by men’s, international, and e-commerce.
LULU is set to report its Q1 FY24 results on June 5.
Global Payments Inc. (GPN)
Global Payments is a top payments technology firm and an S&P 500 member with a growing portfolio. GPN shares have tumbled around 19% in 2024, including a huge post-release selloff. Global Payments fell in early May after it maintained its 2024 guidance but said it “continues to reflect the potential for a slightly more tempered economic environment than we saw in 2023.”
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GPN’s recent downturn is part of an extended decline that began after it hit new highs in April of 2021. Global Payments trades over 50% below its highs and 42% below its average Zacks price target.
Yet, Global Payments has climbed 200% over the last 10 years to top its Financial Transaction Services industry and the S&P 500’s roughly 180%. Looking back over the past two decades, GPN is up 790% to double the benchmark and top the Zacks Tech sector’s 615%.
GPN appears to be finding support near its recent lows. Plus, Global Payments trades at 20-year lows of 9.1X forward 12-month earnings. This marks a 75% discount to its 10-year highs, 50% vs. its median, and 65% value compared to the Zacks Tech sector.
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The company’s various offerings range from digital payments solutions and credit card portfolio management to point-of-sale solutions, analytic and customer engagement tools, and beyond. Global Payments has made various acquisitions over the years, including its roughly $4 billion deal to buy EVO Payments in March 2023.
Wall Street is worried about slowing growth vs. its boom years between FY19 and FY21. Global Payments is still projected to grow its adjusted EPS by 12% in 2024 and 14% next year on the back of 7% higher sales each year to pull in nearly $10 billion in 2025.
GPN pays a dividend that yields 1%. And 75% of the brokerage recommendations Zacks has are “Strong Buys,” with only one sell.
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NIKE, Inc. (NKE) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
Global Payments Inc. (GPN) : Free Stock Analysis Report
