It is never easy to see your stocks getting battered.
Experiencing share price volatility is, however, part and parcel of investing.
Lower share prices are not always a bad thing.
It could mean a great opportunity to scoop up shares on the cheap when other investors are feeling bearish.
Companies sometimes encounter temporary problems that result in lower revenue, profits, and cash flows, resulting in their share prices getting hammered.
If the business retains its quality, it can eventually overcome these obstacles and post better growth.
We profile four US stocks that recently touched their 52-week lows to see if they could stage a meaningful rebound.
Doximity Inc (NYSE: DOCS)
Doximity is a leading digital platform for US medical professionals and its members include over 80% of US physicians across various specialities and practice areas.
The company’s share price slid by nearly 29% year-to-date and recently hit a 52-week low of US$21.85.
Doximity released its fiscal 2024’s first quarter (1Q FY2024) results ending 30 June 2023 recently.
It was a good set of earnings with revenue rising 19.7% year on year to US$108.5 million and net profit climbing nearly 27% year on year to US$28.4 million.
The software company also has very low capital expenditure requirements, allowing it to generate a positive free cash flow of US$55.6 million, 30% above the level generated a year ago.
However, investors were concerned that Doximity announced a 10% cut in its workforce and downgraded its revenue guidance for FY2024.
The company is facing economic pressures amid slowing sales from its pharmaceutical customers.
Doximity will incur a restructuring charge of US$8 to US$10 million to be recognised in 2Q FY2024.
CVS Health Corp (NYSE: CVS)
CVS Health is a health solutions company that helps its customers to manage their health conditions, stay compliant with medication, and access affordable healthcare services.
The company’s share price has skidded to a 52-week low of US$64.62 and is down nearly 28% year-to-date.
CVS Health reported a mixed set of earnings for its fiscal 2023’s first half (1H 2023).
Revenue increased by 10.6% year on year to US$174.2 billion but operating and net profit fell by 18.7% and 25% year on year to US$6.7 billion and US$4 billion, respectively.
Free cash flow, however, surged by 56% year on year to US$11.8 billion for 1H 2023 and the healthcare company paid out a dividend of US$1.21, 10% higher than the prior year.
Like Doximity, CVS Health also announced a layoff of 5,000 employees to cut costs earlier this month.
In addition, Blue Shield of California, a mutual benefit corporation, dropped CVS Health as its service provider and tied up with Amazon Pharmacy instead.
Sea Limited (NYSE: SE)
Sea Limited is a Singapore-based company with businesses in digital entertainment (Garena), e-commerce (Shopee), and digital financial services (SeaMoney).
Sea’s share price has plunged 31% year-to-date and touched a year-low of US$36.48.
The company’s recent second quarter 2023 (2Q 2023) results saw growth for Shopee but a decline in revenue for its gaming division.
E-commerce marketplace revenue jumped 28% year on year to US$1.9 billion for 2Q 2023.
Digital entertainment, though, saw revenue slip to US$529.4 million for the quarter compared with US$539.7 million a year ago.
Although quarterly active users grew 11% quarter-on-quarter, the division still posted a 12.1% year on year drop in users to 544.5 million.
Bookings also continued to dip to US$443.1 million for 2Q 2023, down 4% quarter-on-quarter.
Shopee has communicated its goal of boosting investments to better compete, leading to worries over losses incurred in future quarters.
The company had reported three consecutive quarters of profitability but investors fret that it will fall back to losses as it cited the need to ramp up spending.
Estee Lauder Companies Inc (NYSE: EL)
Estee Lauder is a leading manufacturer and retailer of quality skincare, makeup, fragrance and hair care products.
The company’s well-known brands include Estee Lauder, Clinique, Bobbi Brown, and Tom Ford which are sold in around 150 countries.
The cosmetics company’s shares have plunged by 41% year-to-date and recently touched a 52-week low of US$147.18.
Estee Lauder reported a weak set of earnings for its fiscal 2023 (FY2023) ending 30 June.
Sales declined by 10% year on year to US$15.9 billion while operating profit fell 52% year on year to US$1.5 billion as administrative expenses dropped by less than its revenue decline.
Net profit plunged 58% year on year to US$1 billion.
The company also saw its free cash flow for FY2023 turn negative after posting a positive free cash flow of US$2 billion for FY2022.
Management has forecast sales and net profit that was below estimates as it encountered a slower-than-expected rebound for its travel retail segment in Asia.
Coupled with waning demand in the US because of high inflation and a weak recovery in China, Estee Lauder’s sales look to remain under pressure in the near term.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
