These 3 Nasdaq Stocks Hit 52-Week Lows: Which Is the Best Buy?

In Tuesday trading there were 26 Nasdaq stocks hitting 52-week lows compared to 287 52-week highs. Over on the NYSE there were only two stocks hitting 52-week lows compared to 314 52-week highs.

Because there are so few 52-week lows, I thought my commentary today should revolve around three of the Nasdaq stocks hitting 52-week lows. All three are excellent stocks to own for the long haul. 

Here's why I like each. At the end, I'll tell you which of the three is the best buy. 

Helen of Troy

First up is Helen of Troy (HELE), the Texas-based global consumer products company whose brands include OXO, Osprey, Drybar, Braun, Vicks, and many more. It is the smallest of the three with a $1.39 billion market cap. 

The company’s stock hit its 25th 52-week low of the past 12 months on Tuesday at $59.65. It hasn’t traded this low since December 2014. 

What’s the problem? The consumer appears to have buckled from higher prices and interest rates. 

On July 9 it reported Q1 2025 results that included a 12.2% decrease in sales to $416.8 million and a 49% decrease in adjusted earnings per share to $0.99. Revenue missed the analyst estimate by $30 million while it missed the consensus EPS estimate by 57 cents or 37%. 

Naturally, its shares fell 30% on the news. 

It didn’t help that it lowered its 2025 guidance for both sales and earnings -- $1.91 billion in sales at the midpoint of its outlook with EPS of $7.25 -- as it continues to work on its Project Pegasus strategic plan to make the company more efficient, cost effective, and growth oriented. It’s a work in progress. 

However, it wasn’t all bad news in the first quarter. For example, its gross margin was 48.7%, 330 basis points higher than a year earlier. In the trailing 12 months ended May 31, the company’s gross margin was 48.1%, the highest level in the past decade. 

Unfortunately, because of the decline in sales, combined with an increase in marketing expenses to reignite its brands, its operating margin was 120 basis points lower year over year to 7.4%. It continues to work on pushing that into double digits where it was in 2021 and 2022.

Based on expected free cash flow of $230 million in 2025 and an enterprise value of $2.16 billion, it has a free cash flow yield of 10.6%. I consider anything above 8% to be in value territory. 

Lululemon 

As a Canadian with a wife that worked in fashion retail for 20+ years, Lululemon (LULU)has always been on my radar. It’s one of the few Canadian apparel brands that’s been successful south of the border in the U.S.

The company’s stock hit its 20th 52-week low of the past 12 months on Tuesday at $282.04, 45% off its 52-week high of $516.39 set in December 2023. It hasn’t traded this low since October 2022. 

While analysts still like the brand -- 27 analysts cover its stock rating it Moderate Buy (4.19 out of 5) with a $403.79 target price -- the number of Hold ratings has increased to 6 over the past six months. 

Why is that?

Like every retail business, there will be times when the consumer slows their spending at your establishment. It’s why they say “Retail is fickle.” All you can do is continue to produce excellent products and work hard to get the customer buying again. 

Lululemon experienced slower growth in its Q1 2024 results released in early June. While sales were 10% higher in the first quarter to $2.21 billion, its revenue growth in the key Americas market slowed to just 3% compared to 17% a year earlier. 

Due to this slowdown, it lowered its guidance for revenue in 2024 to $10.75 billion at the midpoint, a growth rate of 10.5%, excluding the 53rd week in 2024, with EPS of $14.37. 

“As we look to the rest of the year, we remain focused on leveraging our strengths and differentiated model to advance our Power of Three ×2 strategy and fuel performance,” stated CFO Meghan Frank.

I’ve followed this company for a long time. It always figures out how to get unstuck. 

Case in point, its international sales in Q1 were 40% higher, excluding currency. They now account for 27% of revenue, up from 22% a year earlier. As it continues to grow outside the U.S. and Canada, it will tweak what ails it in the U.S. -- Canada’s revenue grew 11.3% YOY -- and get back on track. 

In the meantime, it’s repurchasing its shares. That’s a wise move.

Starbucks

Starbucks (SBUX)is another company I’m quite familiar with. I’m there virtually every morning at 6 a.m. reading and responding to emails.

The company’s stock hit its 26th 52-week low of the past 12 months on Tuesday at $71.55, 34% off its 52-week high of $107.66 set in November 2023. It hasn’t traded this low since October 2022. Over the past five years, it’s traded at this level on four occasions, hitting a 5-year low of $50.02 in the big correction of March 2020. 

In early July, Starbucks announced it was making big changes to its business to reignite sales. Siren Craft System is the company’s new plan to help its baristas do more business in a more efficient, less stressful way. Many of the changes are coming from employees themselves.

As Inc.com noted, Starbucks is changing the order that drinks are made to speed the process for baristas. 

“One of the key modifications partners helped to develop was a change in what we call ‘beverage sequencing’ -- wherein milk is steamed before espresso shots are pulled,” Inc.com reported Starbucks comments from its press release. 

“Through in-store trials, partners realized they could save time without sacrificing quality or taste by reversing the process and pulling the espresso before steaming milk.”

I can say, unequivocally, that this is a good move. 

I will order an Americano for myself and a Black Tea Lemonade for my wife. Inevitably, hers comes out first, while I wait for the espresso to mix with hot water. Since hers is faster to make, it makes sense to do mine first, and then quickly do hers. That way, her ice has less time to melt, and I can have a couple of sips of my coffee while waiting. Two happy customers. 

It adds up when you repeat these kinds of things over 17,000 stores in the U.S. and Canada.

Sales are down -- same-store sales in the U.S. fell by 3% in Q2 2024, the first quarterly drop since 2020 -- but I don’t believe they’re out. As the company implements these changes, I believe it will begin to see more positive numbers in the fourth quarter and into 2025.

Despite lower expected sales in 2024, Starbucks will still generate over $4 billion in net income this year, not too far off its all-time high of $4.52 billion in 2018. 

Down 40% from its July 2021 all-time high of $126.32, buying ahead of the results might be considered a risky move by some, but I see it as a smart bet. Use options if you want to hedge your risk. 

The Best Buy? 

As much as I love both Starbucks and Lululemon, Helen of Troy’s valuation makes it the best buy at this point if you’re a value investor. However, owning SBUX or LULU over the long haul isn’t a bad move.   

 

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On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.