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They may be the big names of their respective industries. But just because a company is a constituent of the S&P 500 (SNPINDEX: ^GSPC) large-cap index doesn’t mean its stock can’t be completely up-ended. While the index is up 13% for the past 12 months, more than 100 of these 500 names are in the red for this timeframe, and more than 70 of them are down by double digits.
The funny thing is, three of these S&P 500 tickers have been errantly, excessively sold off. They’re now more than ready to stage a buy-worthy recovery effort. Here’s a closer look.
In light of the first-ever contraction Meta Platforms (NASDAQ: FB) reported for the number of monthly users of its flagship social media website — Facebook — last quarter, it would be easy to assume fellow social networking outfit Twitter (NYSE: TWTR) is facing the same headwind. The market’s certainly treated Twitter stock like that’s the case. Twitter shares are down more than 40% from October’s high, and still within sight of the new 52-week low reached just last month.
It’s mostly unmerited weakness, however.
Image source: Getty Images.
Though they’re technically in the same business, Facebook and Twitter are considerably different from one another. Facebook’s relatively open-ended publishing platform opens the door to credibility problems that become problems for advertisers. While Twitter is also in the ad business, its much simpler approach to online communications steers it clear of many of the publishing pitfalls unique to Facebook.
To this end, Twitter’s monthly user headcount was about 3% bigger in the final quarter of last year than it was during the third quarter. It’s a small improvement, but an improvement Facebook wasn’t able to match. And Twitter’s top line for the recently ended fourth quarter was up 22% year over year, versus Facebook’s more modest 20% growth.
This edge isn’t reflected in Twitter’s deteriorating stock price, which has also been weighed down by November’s news that founder and CEO Jack Dorsey was stepping down from the latter. Once investors realize the microblogging platform is still poised to see revenue growth of 18% this year and nearly 22% next year, though, the pullback could unwind in a big way.
Penn National Gaming
Penn National Gaming (NASDAQ: PENN) may not be a top-of-mind prospect when looking for an investment from the gambling and casino arena. In the wake of the stock’s 63% sell-off from last March’s high, however, maybe it should be.
Yes, the gambling industry is recovering from its pandemic-prompted lull. The American Gaming Association even recently reported that gaming revenue in the United States reached a record-breaking $53 billion in 2021, ending the year accelerating this growth. Namely, the fourth quarter’s total domestic take was another record-breaker of $14.3 billion, topping the third quarter’s then-record figure of $13.9 billion.
Things aren’t quite as brisk overseas, but Mordor Intelligence estimates the global gambling industry will still grow at an annualized clip of 9.6% through 2027. With Penn National’s 44 locales — all of them in the United States — the company is well-positioned to plug into the sector’s rising tide where it’s rising the most.
That’s not even the key reason you’d want to own a piece of Penn over the course of the next few years, though. The more bullish argument for buying Penn National Gaming is its impressive presence in the still-nascent online gambling industry. And, in addition to its online casino and bingo app, Penn is also a major stakeholder in Barstool Sports.
While Barstool isn’t a betting platform in and of itself, it’s a name that is closely associated with sports. Penn National Gaming has successfully leveraged the brand to make some of its casinos major sports-betting destinations, with more on the way. In the meantime, the Barstool name is being used to build Penn’s sportsbook business.
It matters more than most investors might realize. While most consumers support the idea of legalizing sports betting, the American Gaming Association notes that only a little more than half of U.S. states actually allow it. And, within the ones that do, the business itself remains relatively anemic; there’s still a great deal of consumer education and product refinement to be done. Market research outfit Technavio says the global sports betting market is likely to grow by 10% per year through 2025, ending up $100 billion bigger than it is now by the end of that period.
Enphase Energy
Finally, add Enphase Energy (NASDAQ: ENPH) to your list of S&P 500 stocks to buy while they’re beaten down.
It’s not exactly a household name. Don’t let its obscurity fool you, though. Enphase is a key player in the solar business, and perhaps a better opportunity than solar panel manufacturers or solar power producers. That’s because the company doesn’t make solar panels. It instead makes the microinverters that convert the sun’s rays into actual electricity. Its IQ8 microinverter may be the world’s best, in fact, seamlessly managing the switch to and from the grid’s power to a rooftop system’s electricity, optimizing solar panel installations.
Paired with Enphase’s IQ battery, these “smart” systems fulfill the promise of solar power that’s been mostly unrealized thus far. Consumers as well as companies certainly seem to love the technology, with last year’s top line growing on the order of 40%, driving nearly a 70% increase in per-share earnings. This year’s top line is projected to improve more than 43%.
This track record and outlook haven’t helped of late. Enphase shares are down 40% for the past three months, possibly stemming from uncertainty regarding political support (and tax incentives) that helped usher in the solar power era.
It’s doubt that isn’t necessary, though. Solar power’s got plenty of support with or without renewed governmental policy. Indeed, the U.S. Energy Information Administration estimates that solar will account for almost half of the country’s power production capacity additions this year. Longer-term, solar’s portion of the total electricity generated within the United States should swell from 5% this year to 20% by 2050, again according to the United States’ EIA. Other nations are seeing similar adoption rates.
All of it, of course, bodes well for Enphase Energy.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool owns and recommends Meta Platforms, Inc. and Twitter. The Motley Fool has a disclosure policy.
