3 Magnificent Stocks to Buy That Are Near 52-Week Lows
Shares of PepsiCo (PEP -0.46%), Kroger (KR -0.21%), and McDonald’s (MCD +0.82%) are trading within about 10% of their 52-week lows. Higher prices have squeezed consumers’ spending power, making it harder for companies to drive meaningful growth.
Still, these businesses have produced relatively solid results despite the headwinds. Their discounted valuations and dividend yields could make them rewarding long-term investments.
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PepsiCo
Pepsi stock has climbed over the last month since the company reported second-quarter earnings, but it’s still trading close to its $134 52-week low. That weakness doesn’t line up with the company’s underlying performance. Year to date, organic (non-GAAP) revenue increased 2.5% year over year, while core constant-currency earnings rose 3%.
Results have been supported by Pepsi’s push to keep key products affordable amid softer consumer spending, and it has the levers to do it. PepsiCo owns an iconic brand portfolio, including Cheetos, Doritos, and Gatorade, backed by global distribution. That combination helps produce steady sales and reliable cash flow to support ongoing dividend increases.
The stock trades at a reasonable forward price-to-earnings (P/E) multiple of 17 and offers a strong dividend yield of 4%, which is supported by earnings. With analysts projecting earnings to grow at an annualized rate of 7% over the next few years, Pepsi could be a rewarding dividend investment from these levels.
Today’s Change
(-0.21%) $-0.12
Current Price
$57.74
Key Data Points
Market Cap
Day’s Range
$56.91 – $58.20
52wk Range
$54.15 – $76.58
Volume
5.9M
Avg Vol
7.6M
Gross Margin
20.98%
Dividend Yield
2.42%
Kroger
Shares of Kroger have fallen 4% year to date to $60 and are trading near their 52-week low of $54 as of this writing. The company benefits from strong customer loyalty and convenient shopping habits, since most people tend to shop at the grocery store closest to home. With nearly 2,700 stores and $148 billion in trailing sales, Kroger has built a durable competitive edge.
Kroger has produced steady sales over time, with recent years showing modest growth. Trailing-12-month adjusted revenue rose 1.1% year over year, while cost-efficiency efforts helped drive a solid 9% increase in adjusted earnings.
The stock trades at just 11 times forward earnings and offers an above-average 2.3% dividend yield that’s supported by earnings. With analysts expecting earnings to grow about 7% per year, the shares look like a genuine bargain that could pay off over the next five years.
McDonald’s
McDonald’s shares have fallen 11% year to date and are about 5% above the 52-week low of $261. Even so, the business continues to perform reasonably well.
In the first quarter, global systemwide sales rose 6% year over year on a constant-currency basis, while comparable sales grew 3.8%. That’s happening as the company leans into value, including relaunching its Extra Value Meal and adding more affordably priced items under $3.
McDonald’s also earns extremely high margins. Its adjusted operating margin was 46% last quarter, reflecting a highly profitable model built on royalties and rent. With nearly 95% of restaurants franchised, the company keeps costs low and cash flow steady — an attractive mix for dividend investors.
The stock trades at 21 times forward earnings and offers a 2.70% dividend yield that’s supported by earnings. With analysts forecasting high-single-digit earnings growth over the long term, this could be a rewarding investment.
