Buying growth stocks when prices decline can be a way to lock in big future profits. The current economy may not be ideal for all businesses, but in the long run it is likely to recover. And amid this recovery, growth stocks are likely to perform better overall.
Three such stocks that investors have been bearish on recently are: Apple (NASDAQ:AAPL), Starbucks (NASDAQ:SBUX)And prolog (NYSE:PLD). They’re all trading near their 52-week lows, and if you have $5,000 to invest, here’s why you should think about adding to these stocks now.
Apple
At around $175, Apple shares have been rising recently, but they’re still not far from their 52-week low of $164.08 and are still down 9% year to date. It trades at 26 times its most recent earnings, which isn’t particularly high for one of the world’s most valuable stocks.
Investors are worried about iPhone demand. In China, a key market for Apple, sales fell earlier in the year as consumers reduced spending or bought cheaper options, including from Chinese rival Huawei.
But with more than 2 billion active devices, Apple already has a huge customer base. And while some consumers may be reluctant to upgrade their phones right now because the economy isn’t ideal, that doesn’t mean sales will lag forever. Consumers could simply postpone upgrading their phones to save money.
You could also wait for a phone that has the latest and greatest artificial intelligence (AI) features; Generative AI features are rumored to be coming to the iPhone 16 later this year.
It would be premature to worry about Apple’s business. Its vast ecosystem and dedicated user base make it likely that the company will continue to grow for years to come, especially as it offers more services and becomes a larger player in AI. For long-term investors, now may be an optimal time to buy the stock.
Starbucks
Another company with a legion of loyal customers is Starbucks. Although there are cheaper options for coffee, the chain continues to do well.
Starbucks recently reported its results for the second quarter ended March 31, and its consolidated net sales of $8.6 billion fell 2%, given current macroeconomic conditions that are less than ideal for the company are not particularly bad. Many consumers are limiting their spending. Net income fell 15% to $772.4 million. But in the long term, Starbucks’ numbers should recover as the economy improves.
However, the disappointing results led to a sharp sell-off in the stock on Wednesday, sending it to a new 52-week low. While Starbucks may look worrisome in the short term, this is still a top restaurant chain to invest in for the long term. Last year, the company announced plans to increase its store count from about 38,000 to 55,000 by the end of the decade.
Investors can also benefit from the stock’s above-average dividend yield, which is above average at 2.6% S&P 500 an average of 1.4%.
prolog
Prologis is a real estate investment trust (REIT) that offers investors a great opportunity to invest in e-commerce. As a leading logistics company, it invests in warehouses and helps companies expand their business. Customers include many big names, such as: Amazon, PepsiCoAnd Walmart.
Uncertainty about the current economic climate is likely to weigh on the stock, which has fallen 22% this year. It is now less than $10 away from its 52-week low of $96.64. Prologis shares are currently trading with an enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio of less than 19, well below its five-year average of over 24.
Prologis can be a good option for investors in the long term as there is still a need for warehousing and logistics in the world of e-commerce. In 2023, the company reported core funds from operations (FFO) per share of $5.61, which was 9% higher than $5.16 a year ago. The REIT also expects core FFO growth of more than 9% this year.
Its financials are strong enough to support its full-year dividend, which amounts to $3.84 per share. At 3.7%, investors can receive a dividend well above the S&P 500 average, giving them even more incentive to buy Prologis shares.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Prologis, Starbucks and Walmart. The Motley Fool recommends the following options: long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy.
Do you have $5,000? These 3 Growth Stocks Are Near Their 52-Week Lows was originally published by The Motley Fool