By Philip van Doorn
Favored stocks for bounce-backs include EPAM, PayPal, Meta and Netflix
Investors don’t need to be told that stocks have been volatile. There’s a market of extremes as Russia’s war in Ukraine continues and investors wait to see what the Federal Open Market Committee does with interest-rate policy March 16.
Below is a list of eight stocks in the S&P 500 that have dropped at least 50% from their 52-week highs, but are favored by analysts for gains of as much as 102% over the next 12 months.
Rebounds can be rapid
From its all-time intraday high on Jan. 4, the S&P 500 was down 13.4% through March 14. That broad decline masks the intensity of daily price movements.
On March 14 — when the S&P 500 declined 0.7%, 153 of its component stocks moved at least 2% up or down, with 82 moving at least 3%, 45 at least 4% and 24 rising or falling by at least 5%.
Sometimes investors will focus on quality for a long-term strategy, emphasizing companies’ growth prospects, operational and profit-margin improvements, or maybe dividend income. But investors and traders may also try to scoop up stocks at discount prices after significant declines, hoping to ride the rebound wave.
At a time of high volatility, some declines that have been driven by companies’ own outlooks for revenue and earnings may have been overdone. Hindsight will be 20/20.
In the meantime, a screen of price action for the S&P 500 components through March 14 shows that 16 stock were down at least 50% from their 52-week intraday highs. Among the 16 stocks, eight have majority “buy” or equivalent ratings among analysts polled by FactSet.
Here they are, sorted by implied upside over the next year, based on consensus price targets:
Company Ticker Decline from 52-week intraday high Date of 52-week intraday high Share "buy" ratings Closing price -- March 14 Cons. price target Implied 12-month upside potential EPAM Systems Inc. EPAM -70% 11/05/2021 65% $220.00 $444.93 102% PayPal Holdings Inc. PYPL -69% 07/26/2021 76% $96.87 $182.20 88% Etsy Inc. ETSY -62% 11/26/2021 67% $118.32 $211.28 79% Match Group Inc. MTCH -53% 10/21/2021 86% $85.06 $149.85 76% Meta Platforms Inc. Class A FB -51% 09/01/2021 66% $186.63 $314.80 69% Las Vegas Sands Corp. LVS -52% 03/16/2021 56% $32.09 $52.04 62% Penn National Gaming Inc. PENN -72% 03/15/2021 62% $40.30 $63.95 59% Netflix Inc. NFLX -53% 11/17/2021 52% $331.01 $509.59 54% Source: FactSet
Click on the tickers for more about each company, including coverage of the recent comments from management teams that did so much to push down shares of PayPal Holdings Inc. (PYPL), Facebook holding company Meta Platforms Inc. (FB) and Netflix Inc. (NFLX).
As if to emphasize how volatile this market can be, shares of EPAM Systems Inc. rose 10% on March 14. The software development services company has 14,000 employees in Ukraine.
Click here Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.
Don’t miss: This ‘all-weather’ approach to quality stocks can help you sail through rough waters while staying ahead of inflation
-Philip van Doorn
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