As daily losses go, the Nasdaq Composite’s 0.2% decline on Tuesday is relatively tame compared to previous days. The Nasdaq is now down nearly 10% on the year, with the tech-heavy Nasdaq 100 off a slightly more palatable 7.8%.
Donald Trump is hell-bent on tariffing the world into submission, starting with Canada. Still, this will only deliver a hard landing for the U.S. economy, something that wasn’t in the cards in November, post-election.
Naturally, with the markets in freefall, the new 52-week lows yesterday were significantly higher than the new 52-week highs. The former were 321, nearly 19 times higher than the latter.
Folks, I think this multiple could rise much higher, and that’s never a good thing, especially when it is due to government policy rather than natural market forces.
Many in the media, including the conservative-leaning Wall Street Journal, have ridiculed the Trump administration's policies.
Therefore, it almost defeats the purpose of recommending stocks to buy hitting new 52-week lows or highs, but that’s what I will do.
With 321 new 52-week lows, there have got to be some value plays among them. Here are two to carefully consider.
Morningstar (MORN)
Anyone who invests has probably visited Morningstar’s (MORN) websites or subscribed to some of its paid advisory services. In my daily writing, I’m constantly referring to its data. It’s indispensable.
Joe Mansueto founded the Chicago-based provider of investment research in May 1984. Since then, its business has grown to $2.28 billion in annual sales and $370 million in net income. Despite operating in a very competitive space, it isn’t going out of business anytime soon.
In yesterday’s trading, MORN hit its 12th new 52-week low, is down 8.2% over the past 12 months, and is 11.21% below its 200-day moving average. You don’t want to be below that level, but it happens.
This past year was a good one for the company. Its organic revenue increased nearly 12% year-over-year, while its operating income jumped 51.2%, to $484.8 million, with an adjusted operating margin of 21.7%, 570 basis points higher than in 2023.
Morningstar has five reportable segments: Morningstar Data and Analytics (38% of revenue), PitchBook (30%), Morningstar Wealth (12%), Morningstar Credit (14%), and Morningstar Retirement (6%). An additional $202 million is allocated to Corporate and All Other revenue.
The Morningstar Wealth segment operates the information I tend to access. Although it does not generate significant revenue for the company, it does a good job advertising Morningstar’s data analytics capabilities.
It would seem that Morningstar’s products have become more valuable, not less, during times of difficulty, as we face now.
So, even though it trades at 25.1x its 2024 adjusted operating income, it’s hard to see its multiple falling too much lower. Since 2015, its total enterprise value to EBIT (earnings before interest and taxes), varied from a high of 61.7x in 2023, to a low of 17.4x in 2016, according to S&P Global Market Intelligence.
Unfortunately, Morningstar’s options volume is virtually non-existent, so there’s no way to use leverage to make your bet.
If you invest for 3-5 years or longer, you’ll do fine, but you might want to save some dry powder should the market fall further, which is entirely possible. Risk-averse investors shouldn’t buy MORN or any other stock in these markets.
Cooper Companies (COO)
Cooper Companies (COO) operates two businesses: CooperVision (67% of revenue), which manufactures and sells single-use, two-week, and monthly contact lenses, and CooperSurgical (33%), whose products and services are focused on fertility and women's health and found in various types of medical facilities worldwide.
On Tuesday, COO stock hit its 25th new 52-week low in the past 12 months. It is 16.41% below its 200-day moving average and down 20.2% over the past year.
On March 6, Cooper reported its Q1 2025 results. CooperVision had 6% organic growth in the quarter, with growth across all three geographic regions, including 8% and 6% increases for the Americas and EMEA (Europe, the Middle East, and Africa).
CooperSurgical’s organic growth in the first quarter was okay, up 2% year-over-year, with its Office & Surgical and Fertility units delivering small increases. Together, its organic revenues increased 5% in the quarter, with an 8.2% increase in earnings per share, to $0.92.
In 2025, it expects 7% organic revenue growth at the midpoint of its guidance, with EPS of $3.98, up from the previous outlook of $3.97. It currently trades at 20.4x this estimate.
Analysts like the company and its stock. Of the 15 analysts who cover it, 11 rate it a Strong Buy (4.47 out of 5). Their mean target price is $111.85, 38% higher than where it’s trading.
If there’s a business that can continue to thrive in uncertainty, it would be the Cooper Companies.
Only once in the past decade has the company’s gross profit margin fallen below 60%. As of Jan. 31, it was 67.0%, expected to rise slightly over the next three years. Further down the income statement, its EBIT margin in 2024 was 18.2%, the highest since 2019, and projected to increase to 26.91% by fiscal 2027 (October year-end).
Unlike Morningstar, Cooper has a decent, if not huge, options volume. Consider the Nov. 21 $120 call if you're into options.
The ask price of $2.00 is 2.5% of yesterday’s closing price of $81.03. It’s currently 48.09% out of the money. Based on the 0.10763 delta, you can double your money by selling before expiration if it appreciates by $18.58 (23%) over the next 8.5 months.
While the probability of being ITM (in the money) by November is unlikely, the end of the tariff war would undoubtedly boost the markets, helping Cooper’s fate.
In the long term, it’s an excellent hold. In the worst case, you’re out $200.
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.
