3 Surprising Blue Chip Stocks That Are More Than 20% Down From Their Highs
The liquidation of technology, especially in small cap stocks, spills over into the markets. However, because these companies do not constitute an important part of indices like the S&P 500 and the Nasdaq, the market looks stronger than the number of performing individual stocks.
However, several blue chip stocks have fallen more than 20% from their highs. Walt disney (NYSE: DIS), Pay Pal (NASDAQ: PYPL), and Kinder Morgan (NYSE: KMI) are all big. Here’s what makes each of these industry leaders a great buy right now.
Disney stock prices have fallen nearly 35% from their all-time high as the company struggles to revitalize its movie theater and park operations in an economy that has not fully recovered.
Disney + subscribers now exceed 118 million. But that wasn’t enough to please Wall Street, which now expected more than 125 million subscribers. Disney may be an international conglomerate with a lot of moving parts. But basically, its activity is not that difficult to understand. Disney offers family-focused, on-screen and in-park experiences that often create lasting memories that generate loyal customers.
As an entertainment business that relies on people traveling around the world to its parks and showing up in theaters, it’s not so surprising that the pandemic and omicron variant COVID-19 threats are negatively impacting his results. Disney is expected to thrive in a post-pandemic world that does not hamper its operations. Until that happens, short-term struggles are inevitable. Investors can take comfort in knowing that Disney could become a stronger company than when it entered the pandemic thanks to the massive success of Disney +. That prospect alone makes valuable stock a great buy now.
Like Disney, PayPal is down more than a third from its all-time high as the FinTech industry comes under fire for what appears to be slowing growth. The increased competition for a slice of the payment processing and e-commerce pie is surely affecting an industry leader like PayPal. But make no mistake: PayPal’s development of its peer-to-peer payment solution Venmo, the acquisition of the browser plug-in service Honey and the recent partnership with Amazon are all trying to keep the traction in his platform.
The main reason PayPal shares were sold was due to fears of slower growth. PayPal expects to end the year with 18% revenue growth from a year ago and over 430 million active accounts.
PayPal is not growing as fast as it has in previous years because it is a whole different business. PayPal has transformed itself from a payment solution linked to eBay to one of America’s largest financial institutions. It is incredibly profitable and generates a ton of free cash flow (FCF) that it can use to grow its business. Investors looking for high-growth fintech names might be better off with a company like Square. PayPal is the industry’s balanced option, offering modest growth, a reasonable valuation, and a secure divide around its dominant position in the market.
While you’ve probably heard of Disney and PayPal, you might not have heard of one of America’s biggest energy transportation and storage companies – Kinder Morgan. Kinder Morgan’s business is highly insulated from economic ebbs and flows, and even from oil and gas prices, due to its long-term pay-and-buy contracts. The 2015 oil and gas recession brought Kinder Morgan to its knees and caused the company to cut its dividend by 75%. Since then, management has transformed the business from a high spend organization into a low growth, high FCF company that rewards shareholders with the fourth highest dividend yield on the S&P 500. At 6.8%, the Kinder Morgan dividend alone provides an enviable annual return. to recover.
To stay relevant for years to come, Kinder Morgan selectively acquired more infrastructure assets and even invested in alternative energies like renewable natural gas (RNG). RNG comes from organic waste, such as methane emitted from landfills, which would otherwise be wasted. RNG can be used interchangeably with conventional natural gas. Given the likelihood that natural gas will pair well with renewables in the energy transition, it’s safe to say that Kinder Morgan is ready to pay and increase its dividend over the long term.
A basket of three leading companies in the sector
Disney, PayPal, and Kinder Morgan all have the potential to complete a wallet in different ways. Disney provides exposure to the entertainment industry through one of the most popular international brands. PayPal is the safest way to invest in the cash transition. Kinder Morgan is a simple bet that the existing energy infrastructure will remain relevant or may even decline slightly in value over time. Each share is likely to appeal to different investors. But if you’re looking for a leading company in the market, buying a basket of all three isn’t a bad idea either.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.