There are plenty of growth stocks trading at obscenely high valuations right now. Part of the reason for that is the current enthusiasm for all things artificial intelligence (AI)-related. Some of those high valuations are because AI has sent some stock prices skyrocketing. However, there are other growth stocks out there being overlooked in the meantime.
If you’re on the hunt for some deals and are willing to be patient, three overlooked stocks you should consider loading up on right now are AstraZeneca (NASDAQ: AZN), United Parcel Service (NYSE: UPS), and Dollar Tree (NASDAQ: DLTR). Each of these stocks is trading near 52-week lows and each has the potential to be a great buy down the road.
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Shares of AstraZeneca finished last week just a few dollars away from the stock’s 52-week low of $60.47. The stock has been struggling despite a strong quarterly report this month. On Nov. 12, the company reported that its sales through the first nine months of the year were up by 19% (at constant exchange rates), totaling $39.2 billion. Its per-share earnings rose by 21% when factoring out foreign exchange.
The concerning news for investors appears to be an investigation in China involving the company’s senior executives and allegations of fraud. China is a key market for AstraZeneca, and if not for those concerns, the healthcare stock would likely be performing a lot better, as its results have otherwise been solid.
While the investigation is a concerning one, investors may be reading too much into it at this stage. AstraZeneca is still a great growth stock to own, and at less than 14 times next year’s estimated earnings (based on analyst expectations), it could make for a solid stock to buy and hold right now.
Another good growth stock for the long term that isn’t so hot with investors these days is United Parcel Service, better known as UPS. Since the start of the year, the stock price has fallen by 14% heading into this week. It has been rallying in recent weeks, but it’s still within about 10% of its lows for the year.
The company is coming off a tough year in 2023, when sales declined by more than 9% to just under $91 billion. But the business is doing better of late, with UPS reporting just under 6% growth year over year for the most recent quarter, which ended on Sept. 30. Heading into the busy holiday shopping season, UPS could be due for stronger numbers if it can continue that momentum into the current quarter.
For long-term investors, this remains an excellent stock to buy regardless of what happens in the short term. There are plenty of growth opportunities in logistics due to rising demand in e-commerce. UPS stock trades at a forward price-to-earnings (P/E) multiple of 15, and it makes for another attractively valued investment to add to your portfolio today.
Discount retailer Dollar Tree has lost more than half of its value this year. It’s around its 52-week low, and it’s a heavily discounted stock, trading at a forward P/E of just over 10. Dollar Tree’s same-store sales growth hasn’t been great, coming in at just 1.3% last quarter (for the period ended Aug. 3). The company says it’s dealing with tough macroeconomic conditions.
Investors are worried that things may get worse, as President-elect Donald Trump is threatening to impose aggressive tariffs on goods imported from China. Dollar Tree, which imports many of its items from China, could feel the effects of that sharply.
However, as Dollar Tree offers more higher-priced products in its stores, it may be in a much better position to handle an increase in expenses than it would have been in the past. Although it’s not a great situation for the business to be in, it can still be a good contrarian investment to hold, given how low Dollar Tree stock trades today. The last time it was trading around its current levels was in 2017.
Between opening more stores and offering higher-priced products, there could still be a lot more growth ahead for Dollar Tree in the future. The near term may be challenging, but investors shouldn’t count out the stock over the long haul, especially as economic conditions improve.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends AstraZeneca Plc and United Parcel Service. The Motley Fool has a disclosure policy.
