3 Troubled Stocks Poised for Potential Recovery: Are They the Ultimate Bargains?

A lot of stocks are facing challenges this year because people fear that tariffs and trade disputes might negatively impact the economy, possibly leading to a downturn. Many businesses have expressed worries over increasing expenses, causing concern among investors who believe a widespread stock selloff could be unavoidable.

However, if your investment horizon is longer-term, purchasing shares that are currently declining in price might prove to be an excellent strategy. By acquiring stakes in solid companies at discounted prices, you set yourself up for potentially significant gains down the line.

Where should you put your $1,000 investment at this moment? Our analysis group has recently disclosed their insights into what they consider to be the top choices. 10 best stocks to buy right now. Learn More »

The three stocks that have underperformed this year yet remain promising for the long term include Target (NYSE: TGT) , e.l.f. Beauty (NYSE: ELF) , and Best Buy (NYSE: BBY) Let's examine these enterprises more closely to understand why they might be worthwhile investments right now.

1. Target

Retail stock This year, Target’s value has dropped by 16%, based on current data. Concerns persist among investors regarding unfavorable economic factors that could negatively impact its upcoming performance, since the company largely depends on non-essential spending. Recently, tariffs have introduced an additional threat; Target cautioned this month that prices will go up for certain items due to higher expenses incurred from these tariffs.

Certainly, there is a possibility that Target’s stock could decrease in value even more in the short term. However, investors should keep in mind that it remains a solid investment option. Target regularly reports profits, and its price is relatively low compared to its worth. Currently, the stock trades at only 13 times its trailing earnings — significantly lower than the industry average. S&P 500 an average higher than 23

Target's stock is currently hovering around its lowest point over the past five years, and with a recent dividend yield of 3.9%, this could make it an attractive proposition for long-term investors who have faith in eventual recovery. Dividend King This company has increased its dividend payments for over 50 successive years. Provided you have patience and plan to hold onto this retail stock for an extended period, purchasing it at present could prove to be a wise decision.

2. e.l.f. Beauty

A business likely to be significantly impacted by tariffs is e.l.f. Beauty, where the CEO expressed relief upon discovering that new import duties from China would not be applied. only 10% -- the worry was that the duty might end up being significantly greater. Since around 80% of their cosmetics production occurs in China, the firm is quite susceptible to increasing import taxes.

Due to these worries, investors have become extremely pessimistic about the stock, causing it to drop nearly 40% from the beginning of the year. Adding to the troubles, the firm reported weakening trends in January, leading them to lower their projections for the present fiscal year (ending this month). They now anticipate a sales growth rate ranging from 27% to 28%, down from their earlier estimate of 28% to 30%.

It remains set to produce approximately $1.3 billion in sales for this fiscal year, marking about a 30% increase over the $1 billion recorded by e.l.f. Beauty last year and surpassing twice the $579 million it posted two years ago. This enterprise has consistently demonstrated robust expansion, although tariffs present some risks; however, these duties should not deter potential shareholders from investing in the company. While it currently trades above 40 times its trailing earnings, this multiple decreases to roughly 18 when considering future projections. forward price-to-earnings (P/E) multiple , as per analysts' predictions.

3. Best Buy

A retailer facing difficulties as a result of tariffs is Best Buy. Recently, they mentioned potentially increasing their prices due to the ongoing trade conflict since both China and Mexico are crucial nations where they source many goods. How well the firm can cope with these conditions hinges on consumer willingness to spend more money on non-essential items.

Best Buy's stock has dropped by just 7% this year, which makes its decline the least severe among the stocks mentioned here. However, the situation might worsen in the near future since Best Buy anticipates that its same-store sales growth rate will likely range from 0% to 2% for the present fiscal year ending at the end of January—this projection does not include the potential impact of tariffs.

Similar to Target, investors should be prepared to show some patience regarding Best Buy's stock. The share price might only begin to recover once consumer spending increases and when the overall economic climate improves.

However, considering the stock’s forward price-to-earnings ratio below 13, this might also present a compelling opportunity to increase holdings amid ongoing market pessimism. Additionally, since Best Buy boasts a relatively substantial dividend yield of 4.8%, shareholders may find sufficient motivation to stay committed to the stock.

Don't let this second chance for a potentially profitable opportunity slip away.

Have you ever felt like you've missed out on purchasing the most profitable stocks? If so, you should definitely listen to this.

From time to time, our skilled group of analysts releases a “Double Down” stock Here's a suggestion for firms that seem poised for growth. If you're concerned that you might have missed out on investment opportunities, this could be an ideal moment to purchase shares before it becomes too late. The data clearly supports this approach.

• Nvidia: If you had put in $1,000 when we increased our investment in 2009, you’d have $282,016 !*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $41,869 !*
• Netflix: If you had put in $1,000 when we increased our investment in 2004, you’d have $482,720 !*

Currently, we're sending out "Double Down" alerts for three amazing companies, and such an opportunity might not come around again anytime soon.

Continue »

*Stock Advisor returns updated as of March 10, 2025

David Jagielski does not hold any shares in the stocks listed above. However, The Motley Fool holds stakes in and endorses Best Buy, Target, and e.l.f. Beauty. Additionally, The Motley Fool discloses their policy regarding these holdings. disclosure policy .