Title: Top Stock Opportunities: Walgreens, PayPal, and Qualcomm Offer Bargains Amidst Market Uncertainty
The stock market’s performance in 2022 has been less than stellar, but investors are now savoring a rally that has boosted the Nasdaq Composite Index by 33% in the first half of the year. While the growth-oriented index has stalled out since then, the S&P 500 and Dow Jones Industrial Average remain in positive territory for July and August. However, the Nasdaq Composite is currently down over 1%, indicating a correction and creating opportunities to buy undervalued stocks.
One such opportunity lies with Walgreens Boots Alliance (NASDAQ:WBA), a struggling pharmacy chain aiming to achieve $4.1 billion in annual cost savings by the end of fiscal 2024. Despite its challenges, Walgreens remains a profitable company on an adjusted basis and boasts an attractive dividend yield of 6.6% annually. With a long history of consistently increasing its dividend, Walgreens is on track to become a Dividend King. The company is also expanding its focus beyond pharmacies, recently acquiring a majority stake in primary care practice VillageMD, with plans to open 1,000 locations by 2027. Currently trading at a fraction of sales and just eight times earnings, Walgreens represents a compelling value stock.
Another stock with potential is fintech giant PayPal (NASDAQ:PYPL), which has seen its shares decline by 20% this year and 40% over the last 12 months. The increased competition in the payments industry has posed challenges for PayPal, as consumers now have more alternatives at checkout, including Apple Pay and others. Despite this, PayPal exceeded analyst expectations in the second quarter and demonstrated a rise in consumer spending, with total payment volume increasing by 10%. The company recently appointed a new CEO, Alex Chriss, who brings fresh insights from his previous role at Intuit. With PayPal trading at just 11 times next year’s earnings estimates, there is hope for a turnaround and regained momentum in the near future.
Smartphone chipmaker Qualcomm (NASDAQ:QCOM) is also facing market apprehension due to concerns about smartphone market saturation and declining shipments. The second quarter saw a 10% drop in global smartphone shipments, affecting major manufacturers including Qualcomm’s key customers, Apple and Samsung. However, Qualcomm remains optimistic about the future, as the smartphone industry typically goes through cycles of booms and busts. Additionally, Qualcomm is diversifying its business into the automotive sector and artificial intelligence, both of which are showing promising growth. The company’s CEO, Cristiano Amon, believes that on-device AI has the potential to drive significant progress across all their products. With Qualcomm’s stock down 25% over the last 12 months, now might be a good time to consider investing in this value stock.
In summary, Walgreens, PayPal, and Qualcomm present compelling investment opportunities amidst the market’s uncertain conditions. Walgreens, with its cost-saving initiatives, dividends, and expansion into healthcare services, is undervalued. PayPal, despite increased competition, is poised for a rebound under new leadership and positive consumer spending trends. Qualcomm, though affected by smartphone market challenges, is diversifying into high-growth sectors and remains optimistic about future prospects. With their attractive valuations, these stocks could provide solid returns for investors willing to seize the opportunity.