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Opportunities Amidst Adversity Opportunities Amidst Adversity

The stock market might be sitting at an all-time high, with the Dow recently closing above 38,000 for the very first time, but the gains continue to be lopsided. About 70% of the stocks in the benchmark S&P 500 continue to trail the index’s performance.

A handful of mega-cap tech companies remain the drivers of the market as we move into 2024. Several stocks of reputable companies are now trading at 52-week lows. While not all of the depressed stocks are worth buying, many are worth consideration. That’s especially true for long-term investors who have patience and are willing to wait for the current market rally to broaden.

A Gritty Opportunity: Archer-Daniels-Midland (ADM)

Commodities Economic Goods Assets Stock Market Prices 3d Illustration

It’s risky, but the long-term upside potential, and dividend, make the stock of Archer-Daniels-Midland (NYSE:ADM) worth considering.

ADM stock fell more than 20% in one day and hit a new 52-week low on news that the company’s chief financial officer (CFO) has been placed on leave and an investigation into accounting practices is being undertaken at the food processing and commodities trading giant. Specifically, Archer-Daniels-Midland is looking into the accounting practices at its nutrition unit.

While an accounting probe is never good, there’s some reason to consider buying ADM stock in this dark hour. First, the accounting investigation is confined to one business segment and doesn’t involve the entire company. Second, the probe was triggered by a voluntary document request by the U.S. Securities and Exchange Commission (SEC), suggesting that it might be procedural in nature. And lastly, ADM stock pays an attractive quarterly dividend of 45 cents a share, giving it a strong yield of 3.44%.

Currently, trading at only seven times future earnings estimates, ADM stock is worth a look. Risky, but potentially beneficial if the accounting issue blows over quickly.

Rising from the Ashes: Alibaba (BABA)

baba value stocks

It’s been a long hard road for Chinese stocks. Especially Chinese technology stocks. A year-long crackdown on tech stocks by regulators and the government in Beijing has left companies and their shareholders battered and bruised.

One of the most beaten down stocks is Alibaba (NYSE:BABA), the e-commerce giant that is often referred to as the “Amazon of China.” In the last 12 months, BABA stock has sunk 38%, hitting a 52-week low and bringing its five-year loss to 54%.

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But here too there is reason for optimism. First comes news that the government in Beijing is preparing a $278 billion support package for the country’s ailing stock market. And second, there are reports that Alibaba founder and former CEO Jack Ma has been buying up BABA stock as the share price has steadily declined. Both these developments are injecting confidence into Alibaba’s stock. So much so that on the day of this writing, the share price is up 8%. Time to bottom fish this one.

Resilience and Endurance: Occidental Petroleum (OXY)

Person holding cellphone with logo of American company Occidental Petroleum Corp. (OXY) on screen in front of website. Focus on phone display. Unmodified photo.

It’s also been a rocky road in the energy market lately. After outperforming in 2022, stocks of oil and gas producers were the worst performing sector of 2023. The decline has carried over into the new year, with the S&P 500 Energy Index down 4% so far in 2024.

Among the hardest hit stocks in the sector has been Occidental Petroleum (NYSE:OXY). The company’s share price is down 6% year to date and languishing at a 52-week low. Investors should view the current situation as a buying opportunity. Warren Buffett does.

Buffett has been buying OXY stock with a purpose to start the year. The legendary investor buys the company’s shares every time the price drops below $60. And with the stock sitting at a 52-week low, Buffett has ramped up his purchases and now owns 34% of the company. Buffett is reportedly enamored with Occidental Petroleum’s management team as well as the company’s balance sheet. Also, he is said to be betting on U.S. energy security amid growing instability in the Middle East.

Buffett’s continued purchase of OXY shares is a strong vote of confidence in Occidental Petroleum and makes it a stock at a 52-week low that’s still worth buying.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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