4 great stocks to buy that are close to hitting 52-week lows

By | February 27, 2024

It can be challenging to follow industrial and energy companies because their businesses can see big ups and downs based on the economy, interest rates or commodity prices.

Sometimes it’s best to buy these companies on weakness when things aren’t going well, with the expectation that there will eventually be an upturn. Importantly, these companies must be financially built up for the difficult times.

Here are four great industrial and energy stocks with rock-solid fundamentals, all trading near their 52-week lows today.

1. ExxonMobil

Energy giant ExxonMobil (NYSE:XOM) is a permanent fixture in fossil fuels. The company explores, extracts, refines and sells oil and gas products. ExxonMobil had boom years in 2022 and 2023, but the stock is near a 52-week low on commodity price weakness. Oil prices have fallen from triple digits to between $70 and $80 per barrel. While refining margins improve as oil prices fall, exploration activity is too large to offset falling oil prices.

The good news is that ExxonMobil is financially healthy. The company has $31 billion in cash on the balance sheet, versus $41 billion in total debt, resulting in net debt of just $10 billion. Investors can enjoy a solid dividend yield of 3.6% at the current share price, and the company has increased its dividend for 41 years in a row, showing that it has weathered multiple ups and downs in the industry.

2. NextEra energy

Renewable energy company and electricity company NextEra Energy (NYSE: NO) is the opposite of Exxon and plays a huge role in renewable energy sources such as wind and solar energy. The renewable energy subsidiary is the largest in the world, with projects throughout North America, and the Florida Power & Light utility serves more than 12 million people in Florida. The company is also an excellent dividend stock, with a 28-year upside streak and a solid 3.6% yield today.

NextEra Energy shares are struggling due to high interest rates. The company relies on borrowing money to finance investments in its operations, and the higher interest rates make debt more expensive and potentially hinder growth. However, interest rates tend to be cyclical and the market expects rate cuts to occur sometime this summer. Don’t lose sight of NextEra’s leading position in a growing sustainable energy sector. Enjoy the drop in the share’s valuation from over 30 times earnings to 16 times.

3. Sagittarius-Daniels-Midland

Food is a core need of society, and Archer-Daniels-Midland (NYSE:ADM) plays a crucial role in feeding the world. The company processes and trades grains, seeds, oils and other agricultural products worldwide. Its massive footprint includes 750 facilities and 42,000 employees, and its pack size and scale make competing with Archer-Daniels-Midland no easy task. The stock is approaching Dividend King status, with 48 consecutive years of dividend increases.

The company is currently under investigation by the Department of Justice for accounting practices related to the pricing of commodities traded within its operations. Shares fell sharply after the news, pushing the stock near a 52-week low. Investors should monitor developments closely and respect the seriousness of possible violations. At the same time, Archer-Daniels-Midland has such a long track record that it seems unlikely that the severity of any alleged violations would ruin a long-term investment thesis. That makes this black-eye situation a potential buy-the-dip opportunity.

4. Deere & Company

There is no food without agriculture, and Deere & Company (NYSE: DE) is perhaps the flagship brand of machinery used for commercial agriculture, construction and forestry. The company’s famous green paint marks every machine in use. However, Deere is not just a machine company. It has also become a technology company. It provides farmers with machinery and software solutions to maximize efficiency and crop yields.

Deere is currently in a slump. Higher interest rates make machinery more expensive for farmers, who often rely on financing to pay for the large tractors and other machinery they use. Deere’s net sales fell 8% year over year in the first quarter of Deere’s fiscal 2024 ended Jan. 28, 2024, and earnings per share fell 5%. Consider buying the stock based on weakness. Analysts believe that in the long term, the company will grow profits by almost 10% per year. Deere is a classic example of an excellent company going through a cyclical phase, as many do.

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool holds and recommends NextEra Energy. The Motley Fool recommends Deere. The Motley Fool has a disclosure policy.

4 Great Stocks to Buy That Nearly Hit a 52-Week Low Originally published by The Motley Fool

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