Sales are always available on the stock market, although they can be harder to find during rallies like the one investors saw over the past year. Most stocks, especially in the tech industry, have become more expensive since early 2023.
There are still some attractive deals out there if you know where to look. Here are three stocks that have fallen from their all-time highs but seem primed for a rebound in 2024 and beyond.
1. PepsiCo
PepsiCo(NASDAQ: PEP) stock became cheaper in 2023 despite the food and beverage giant's generally solid operating trends. Sales in the three quarters that ended in late September were up 12% and earnings expanded at a blazing 16% rate. These are impressive figures for a company situated in the mature and competitive consumer staples niche.
In mid-October, management raised Pepsi's profit outlook thanks to slowing inflation and higher prices across its portfolio. "We are pleased with our performance," CEO Ramon Laguarta said in a press release.
Wall Street is more focused on Pepsi's volume trends, which are admittedly weak. Volume was flat last quarter in the beverage division and fell 2% in the snack foods portfolio. Investors will want to watch this metric over the coming quarters, but in the meantime, they can own Pepsi's stock at a discount and collect passive income from its steadily rising dividend payment.
2. Ulta Beauty
Ulta Beauty(NASDAQ: ULTA) shares sat out of the rally last year, shedding a few percentage points compared to the over 20% increase in the S&P 500. Investors should consider that decline a compelling discount for this attractive business.
The spa and beauty products retailer is growing at a slower rate than investors have seen in recent years, of course. Yet its customer traffic trends are healthy, having risen 6% in the most recent quarter. This boost was partially offset by lower average spending due to the price cuts that are impacting all industry players right now.
Ulta isn't giving up much ground on profitability, though. Operating profit margin landed at 15% of sales last quarter, down slightly from 17% a year ago and still well above the pre-pandemic rate.
The stock should benefit from Ulta's continued sales growth in its existing locations, its online segment, and its new store launches. Watch for this stock to have a better year in 2024.
3. eBay
Investors had some good reasons to be down on eBay(NASDAQ: EBAY) stock last year. The digital marketplace platform is still going through a growth hangover, with sales volumes barely rising in the last two years.
Yet that's a challenge that applies to the entire industry and isn't a reflection of eBay losing market share. Shoppers simply decided to spend less on consumer discretionary purchases this past year.
eBay is making the best of a tough situation. Its advertising and payments processing segments are growing nicely, and the company is rolling out upgrades to its shopping experience that are pushing customer satisfaction higher.
You'll also have trouble finding a more financially strong business in the marketplace industry. eBay generates almost 20% profit margins and plenty of cash flow. As a result, investors can expect their returns to be boosted by eBay's dividend and aggressive buyback spending in 2024.
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Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ulta Beauty. The Motley Fool recommends eBay and recommends the following options: short January 2024 $45 calls on eBay. The Motley Fool has a disclosure policy.
