Making the Grade

5 Companies Trading at a Discount

During breakfast, the financial news network talking heads were blathering away about the latest market drop.

My wife sighed at them, “Don’t tell me how far everything is down. I want to know what was once expensive that’s now on sale.”

That mentality and way of thinking are what I appreciate and love about her.

And she’s right.

There’s a reason I always stress that volatility is our ally, not our enemy.

During sell-offs, corrections and bear markets, investors are given a thousand second chances. They’re handed another shot at shares of solid companies that had previously hit a price they weren’t comfortable with.

The No. 1 complaint I most often hear is “Shares of these companies are over $100! They’re too expensive! I can only buy a handful of them.”

So that’s our focus for this week’s Making the Grade. We’re going to look at second-chance opportunities.

I’ll show you five companies whose shares topped $100 a little more than a month ago… but have since become a lot more affordable.

5 Stocks That Are Now More Affordable

A rising tide lifts all boats.

That’s the gift and curse of bull markets.

Even terrible companies can see their shares soar.

Well, during wide-scale panic sell-offs and bear markets, the inverse is true. Great companies will see their shares gutted, just as the chum will.

So today, I’m going to serve up five companies trading at steep discounts. Though they still offer strong long-term rewards.

Chart - Five Stocks Trading at Deep Discount

Medtronic (NYSE: MDT) shares have tumbled nearly 25% from their 52-week high of $122.15 to $93.50.

The company is a medical device maker, specializing in diabetes pumps, implants, pacemakers and other surgical devices. With the global pandemic putting elective surgeries on the backburner, Medtronic shares have taken a hit.

But let’s be honest… getting a pacemaker or a diabetic pump isn’t “elective.” Oftentimes they are quite necessary, so I wouldn’t expect too much of a slowdown. The company also produces all-important ventilators, which the nation is in desperate need of because of the ravages of COVID-19.

The higher demand for these ventilators should offset demand from any of its minimally invasive or elective businesses.

It currently pays a 2.5% dividend yield that isn’t expected to get cut.

Target (NYSE: TGT) shares have dropped roughly 26% from their 52-week high of $130.24 to around $97.

Obviously, retailers have been hammered during the lockdown. However, only recently did customer traffic at the company’s stores begin to drop. But the secret weapon to Target’s success is its online business. It ranks as the eighth-largest e-commerce retailer in the U.S.

So even though customers are being good citizens and staying home, they’re still likely filling Target’s virtual aisles.

Plus, it offers a 2.85% dividend yield to boot!

American Express (NYSE: AXP) shares have been pummeled in 2020, sliding nearly 40% from their 52-week high of $138.13 to $83.

A couple of weeks ago, the credit card company said it expected first quarter revenue to grow 2% to 4% with earnings per share between $1.90 and $2.10. And that’s because it did see some softness toward the end of February.

But we are seeing spending skyrocket at online retailers in recent weeks. That’s a trend I don’t expect will lose much steam in the near term.

American Express also pays a 2.3% dividend yield.

Shares of Hasbro (Nasdaq: HAS) were walloped when the coronavirus outbreak began in China. That’s where the company’s supply chain is centered.

Currently, shares are $70, which is more than 44% below their 52-week high of $126.87.

But during the pandemic lockdown, toymakers like Hasbro are expected to be silent winners… or are at least helping parents win some moments of silence from their kids. With schools, movie theaters and theme parks closed, work-at-home parents are buying more toys for their tots.

And Hasbro is licensed to produce the hottest toy of the year: Baby Yoda from The Walt Disney Company’s (NYSE: DIS) The Mandalorian.

Even better, at its current price, Hasbro is offering a 4% dividend yield.

Finally, Roku (Nasdaq: ROKU) shares have plummeted almost 50% from their 52-week high of $176.55.

Meanwhile, homebound Americans are glued to their televisions, which is good news for streaming service companies like Roku. Millions of people around the country are using Roku’s devices and platform to stream Netflix and other services. So we can expect it to thrive in the months ahead.

Buy Now

I don’t think investors should be deterred by share price. A great company is a great company. And if shares are undervalued to future growth, they’re a steal at $100, $200… or even $1,000.

These five companies have seen their shares fall below $100.

But they could rocket back above that level in the weeks and months ahead. Even better, most of them pay dividends, which can provide income or an extra return boost through a dividend reinvestment program.

And that makes them a lot more attractive – and affordable – for the long haul.

These are expensive stocks that are now on sale. Don’t expect them to stay that way forever.

Here’s to high returns,

Matthew