2 Brilliant Stocks Down 41% and 51% to Buy Now

The stock market has seen impressive growth so far in 2024. S&P500 the index grew by 14.5%, and the technological one even more Nasdaq Composite up 18% over the period. Driven by encouraging earnings results and excitement around artificial intelligence (AI) and other trends, high-impact stocks including Apple, NvidiaAND Amazon reached new highs.

Some of the hottest stocks on the market could still go higher, but it would be a mistake to miss opportunities in companies whose shares are still trading well below their previous valuation peaks. If you’re looking for investments that offer attractive valuations and strong long-term prospects, read on to learn why two Fool.com contributors have identified Altria Group (NYSE:MO) AND Walt Disney (NYSE:DIS) as the best stocks to buy right now.

Altria is a strong defensive stock with an excellent dividend profile

Keith Noonan: Altria shares are up about 13% since the beginning of the year, but the company’s stock price is still down about 41% from its peak. While the tobacco giant still leads the U.S. market with its Marlboro brand, it is facing some secular headwinds. Consumers are continuing to shift away from cigarettes, and that trend is likely to continue.

The company’s non-GAAP revenue and adjusted earnings declined approximately 2.5% due to a decline in unit sales in the smoking tobacco category. The total number of cigarettes sold during the period declined approximately 10% year over year. On the other hand, management reaffirmed its guidance for full-year adjusted earnings per share growth of 2% to 4.5%.

Altria has actually managed to grow its earnings per share by about 26% over the past five years thanks to price increases and share buybacks. While the company faces long-term headwinds due to declining unit volumes, the stock remains attractively valued.

Altria trades at less than 9 times expected earnings this year and pays a dividend yield of 8.6% based on the company’s current share price. What’s more, there’s a good chance that investors who buy shares today won’t have to wait long to enjoy an even bigger gain.

Last August, Altria raised its dividend by about 4.3%. It was the 58th dividend increase the company has implemented in the past 54 years.

The tobacco giant is undoubtedly facing challenging trends in the cigarette market, but it continues to invest in and grow the smoke-free category, and its dividend payout should remain comfortably covered for the foreseeable future. With a strong earnings base despite demand headwinds and a large, sustainable dividend, Altria is an attractive defensive stock that also offers compelling capital growth potential.

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Investors are excited about Disney again

Jennifer Saibil: Disney is still the entertainment company to beat, with a solid slate of films, unrivaled global theme parks, an unrivaled content library, and many other gold-star assets. It has earned $89 billion in trailing-12-month revenue over the past three years, ranking 47th in the Fortune rankings of the largest companies in the us That’s up 40% in the last three years. So why have stocks fallen 51% from their peaks?

Mostly a lot of variability. Disney made a stunning comeback after the pandemic, but its various segments have been all over the place since then.

The parks were closed and sales were non-existent, but that has changed now and the parks have regained strong momentum. Park revenues grew 10% year over year in the second quarter of fiscal 2024 (ended March 30). That has been the trend historically, and barring another global pandemic or other shock, it should continue.

Streaming has grown rapidly over the past few years and now accounts for more than half of the entertainment segment’s revenue, as well as a quarter of the company’s total revenue. That’s driven by a mix of subscription and advertising revenue. Streaming, excluding ESPN+, turned profitable for the first time in the second quarter, and management is forecasting full profits by the end of the fiscal year. That should be a big boost for the stock.

The rest of Disney’s content business, including its linear networks and box office films, continues to struggle. Viewers continue to switch from cable or to streaming, which hurts cable revenue, and also shift away from traditional broadcast TV, which hurts its advertising business.

Bob Iger’s return as CEO has eased the burden on shareholders and brought some stability to the company. Investors have a lot of faith in Iger, who led the company through a remarkable 15-year growth spurt before stepping down as CEO in 2020. He returned to what was supposed to be a temporary role as the company clarifies its direction, but his term has since ended through 2026. Disney has focused on driving profitability with Disney+, bringing magic back to the parks and giving more freedom to the creators who make the system work.

Disney shares are up 13% this year as investors cautiously build enthusiasm. In the long run, it should return to beating the market-beating winner.

Is it worth investing $1,000 in Altria Group right now?

Before you buy Altria Group stock, consider the following:

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil holds positions at Walt Disney. Keith Noonan holds positions at Walt Disney. The Motley Fool holds positions in and recommends Amazon, Apple, Nvidia, and Walt Disney. The Motley Fool has a disclosure policy.

The Bull Market Is Here: 2 Brilliant Stocks Down 41% and 51% to Buy Now was originally published by The Motley Fool