The stock market continues to move in fits and starts as investors and traders assess ongoing issues that include bank failures, elevated interest rates, war in Ukraine, an uneven economic recovery in China, and a debt showdown that’s taking place in Washington, D.C. As always, quarterly earnings continue to move individual stocks higher and lower.
In the current environment, some stocks are surging and have more than doubled their share price year to date, while other stocks continue to languish or move at a snail’s pace. However, many of the stocks that remain depressed are of exceptional companies and household names. In some case, the slumping share price is not the fault of management but rather of outside forces beyond their control. Investors should be attuned to these bruised and battered stocks because they present great long-term opportunities.
Here are three beaten-down stocks with 100% upside potential.
American Express (AXP)
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While it’s mostly known for its credit cards, American Express (NYSE:AXP) is technically among the 20 biggest banks in the U.S. based on its asset size of $138 billion. This fact has led the company’s stock price to be dragged lower amid the regional banking crisis that has gripped markets since March. AXP stock has declined 18% since February of this year when rumblings of trouble in the banking sector first emerged. However, this is a case of American Express being dragged lower by a sector downturn. Fundamentally, the credit card issuer remains fine.
In time, AXP stock is sure to recover as worries about banks subside and investors realize that American Express shares are undervalued. The company also continues to report decent quarterly earnings that do not justify the selloff in its stock. At the end of April, American Express reported record Q1 revenues of $14.3 billion, an increase of 22% from a year earlier and reaffirmed its guidance for this year of revenue growth in a range of 15% to 17%. AXP stock is currently trading more than 20% below the consensus forecast of analysts.
Walt Disney Co. (DIS)
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Things have gone from bad to worse at Walt Disney Co. (NYSE:DIS) following its latest earnings print. This presents a buying opportunity for long-term investors. DIS stock has fallen 10% since the company reported its results on May 10. The company’s share price is nearly 30% below its 52-week high and sinking. While this might raise stress levels in the near-term, it sets up investors who buy the stock now for big future gains.
The latest disappointment for Disney shareholders came with the revelation that the company lost four million subscribers at its Disney+ streaming service this year’s first quarter. Overlooked in the current selloff is the fact that other areas of Disney’s business were strong in the quarter, notably its theme parks and theatrically released films. Also, the majority of the subscription losses at Disney+ occurred in India, which is a much smaller market than North America and Europe for the company.
And, the company reported higher subscription revenue at Disney+, where average revenue per user rose 20% to $7.14 among subscribers in the U.S. and Canada. Disney CEO Bob Iger is undertaking a broad restructuring of the company that has included 7,000 job cuts. In time, the changes and cost control measures being initiated will bear fruit and DIS stock will rise. Patience is required.
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Another company whose stock has been depressed as it restructures coming out of the pandemic is Amazon (NASDAQ:AMZN). The e-commerce giant has seen its share price fall 40% from an all-time high reached in July 2021 when Covid-19 was still raging and people were forced to shop almost exclusively online. Despite a tentative recovery, AMZN stock remains 25% below its 52-week high and continues to trail the gains seen in other mega-cap tech stocks.
The lackluster performance comes as Amazon downsizes its e-commerce and delivery operations after overbuilding during the Covid-19 crisis, closing warehouses and fulfillment centers, laying off more than 25,000 workers, and canceling major projects. The restructuring is taking time but starting to pay off. Amazon recently announced better-than-expected first-quarter earnings driven, in large part, by continued strength in its cloud computing business.
The company reported earnings per share (EPS) of 31 cents compared to a consensus forecast of 21 cents expected on Wall Street. Revenue totaled $127.4 billion versus $124.5 billion that was expected by analysts, according to Refinitiv data. Online advertising also showed strength in the quarter, coming in at $9.5 billion compared to $9.1 billion that was forecast. Long-term, AMZN stock will be A-Okay.
On the date of publication, Joel Baglole held a long position in DIS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com 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.