3 Struggling Stocks That Could Be Bargain Buys Right Now

Many stocks are facing difficulties this year driven by concerns surrounding tariffs and trade wars, which could negatively impact the economy and potentially lead to a recession. Several companies have expressed worries about rising costs, leading investors to fear a larger market sell-off may be on the horizon.

However, for long-term investors, purchasing stocks that are currently declining in value can be a strategic decision. By investing in strong businesses at lower valuations, you can position yourself for substantial returns in the future.

Here are three stocks that are currently experiencing downward trends but hold promise for long-term growth: Target (TGT -4.86%), e.l.f. Beauty (ELF -1.88%), and Best Buy (BBY -2.91%). Let’s dive deeper into each of these companies to understand why they could be smart investments today.

Target

The retail giant Target has seen its stock value drop by 16% this year. Investors remain anxious about the challenging economic landscape, especially since Target's success depends significantly on consumer spending on non-essential items. Additionally, tariffs have introduced new risks, as the company recently indicated that prices on specific goods will increase due to rising costs.

While it is possible that Target's stock could decrease further, it is also important to note that it remains a fundamentally sound company. Target frequently reports profits, and its current valuation is appealing, trading at only 13 times its trailing earnings compared to the S&P 500 average of over 23.

Currently, Target's stock is near its five-year low, and with a dividend yield of 3.9%, it could attract long-term investors who are willing to be patient. This is a Dividend King that has steadily increased its dividend payout for over 50 years, making it a worthwhile option for those committed to a longer-term investment strategy.

e.l.f. Beauty

The cosmetics company e.l.f. Beauty is another stock that may be sensitive to tariff impacts. The CEO expressed relief that new tariffs on imports from China were set at only 10%, as initial fears suggested they could be much higher. Since e.l.f. Beauty produces about 80% of its products in China, it is particularly susceptible to increased tariffs.

This vulnerability has made investors cautious, causing the stock to tumble nearly 40% since the beginning of the year. Further complicating matters, the company reported weaker trends in January, resulting in a downward revision of its sales growth projections for the fiscal year.

Nonetheless, e.l.f. Beauty is still on track to achieve approximately $1.3 billion in sales for the fiscal year, marking a notable increase over the previous year's $1 billion. This growth trajectory remains strong, and while tariffs pose a potential challenge, investing in e.l.f. shares may still be a good decision. With a trailing P/E ratio exceeding 40, the forward P/E drops to 18, reflecting a more favorable outlook based on analysts’ expectations.

Best Buy

An additional retailer facing headwinds due to tariffs is Best Buy. The company has recently indicated that it might need to increase prices because of the trade conflict, given its reliance on products imported from China and Mexico. Its ability to navigate these challenges will largely hinge on consumer willingness to pay higher prices for discretionary items.

Best Buy's stock has dipped only about 7% this year, making it the least affected of the three mentioned here. However, the company has cautioned that its comparable sales growth for the current fiscal year may be between 0% and 2%, and this does not yet account for the impacts of tariffs.

As with Target, patience is critical for investors in Best Buy right now. The stock may not show significant gains until consumer spending revives and economic conditions improve. With a forward P/E ratio of less than 13, this could be an enticing opportunity to invest while the market sentiment remains cautious. Additionally, Best Buy offers a robust yield of 4.8%, providing another incentive for long-term investors to remain committed to the stock.

No positions in any of the mentioned stocks were held by the writer. There are, however, recommendations for the stocks listed above.

stocks, investing, finance