Three Stocks Near Their 52-Week Lows: Are They a Buy?

Stock #1: Nike ($NKE)

First up is Nike—a stock I personally own. But as I always say, never buy a stock just because I or anyone on the internet owns it. Always do your own research! Our focus here is to teach a principled investing philosophy, which I’ll touch on more later.

Nike is currently trading at $71 per share. Just a few years ago, at the end of 2021, it was sitting at $180, and many doubted it would ever drop below $100. Well, here we are. This proves that anything can happen in the stock market.

But remember, just because a stock is at a 52-week low doesn’t automatically mean it’s undervalued. Think about it this way: If I list my house for $10 million when it’s only worth $1 million, and then drop the price to $5 million, is it suddenly a great deal? No. It’s still overpriced.

Nike’s Key Metrics:

• Market Cap: $100 billion
• Free Cash Flow (FCF): $5.5 billion (higher than its 5-year average!)
• Gross Margin: 44.5%
• Net Margin: 10% (consistently)
• Dividend Yield: 2.1%, using less than 50% of its FCF

Despite recent negative sentiment, Nike remains a juggernaut. It dominates the sportswear market with a 43.7% market share—an obliteration of the competition.

Nike blends innovation with iconic storytelling. They’ve secured lifetime deals with LeBron James, Kevin Durant, and of course, Michael Jordan. To ensure future success, they’re also locking in next-generation talent like Caitlin Clark and soccer prodigy McKenna Mack.

Risks Facing Nike:

1. Heavy reliance on China as a key growth driver
2. Increasing competition from brands like Anta
3. Rising costs and inventory challenges squeezing margins

Stock Analyzer Breakdown

Using my Stock Analyzer Tool, here’s how Nike stacks up:

• Revenue Growth: 3%, 5%, 7%
• Profit Margin: 10%, 11%, 12%
• P/E Ratio: 20, 23, 26 (Nike deserves a premium multiple)
• Desired Return: 9%

Stock Price Projections:

• Low Price: $60
• Mid Price: $84
• High Price: $118

At the current price of $71.20, this suggests an 11.5% return (including dividends). My move? I’m selling puts on Nike at lower prices. If you want to learn more about this strategy, join our community!

Stock #2: AMD ($AMD)

Advanced Micro Devices (AMD) is the next stock on our list. It hit an all-time high of $227 in March 2024, then dropped to $114 last week before settling around $120 per share.

AMD’s Key Metrics:

• Price-to-Free Cash Flow: 126 (Ouch!)
• P/E Ratio: 107 (Yikes!)
• 5-Year Price-to-Free Cash Flow: 98
• Shares Outstanding: Up 35% in five years

Despite some concerning numbers, AMD is aggressively competing with Nvidia by launching AI chips like the MI 325X and MI 350. They also acquired Silo AI for $665 million to strengthen their AI capabilities.

Concerns:

• Heavy reliance on Taiwan Semiconductor (TSMC)
• Geopolitical risks
• Aggressive dilution of shares

Stock Analyzer Breakdown

• Revenue Growth: 8%, 12%, 16%
• Profit Margin: 8%, 15%, 22%
• P/E Ratio: 18, 21, 24
• Desired Return: 9%

Stock Price Projections:

• Low Price: $30
• Mid Price: $85
• High Price: $186

Even with aggressive assumptions, AMD is priced higher than its intrinsic value, making it risky. I personally place this in the too-hard pile for now.

Stock #3: Intel ($INTC)

Intel has been a rollercoaster of a stock, and I have a small position in it. While I’ve made money trading Intel in the past, my current position is at a loss, but this is a long-term play for me.

Intel’s Strengths:

• 70% market share in the server CPU market
• Massive investments ($1 billion) in fabrication to challenge TSMC
• Government backing ($52 billion CHIPS Act)

Concerns:

• Increasing competition from AMD, Nvidia, and TSMC
• Recent CEO step-down
• Execution risk is massive

Stock Analyzer Breakdown

• Revenue Growth: 0%, 2%, 4%
• Profit Margin: 14%, 18%, 22%
• P/E Ratio: 12, 15, 18
• Desired Return: 9%

Stock Price Projections:

• Low Price: $20
• Mid Price: $32
• High Price: $51

At $20 per share, Intel might just be worth the risk for a small bet. It could be a home run if execution is solid.

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