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3 Worst-Performing Dow Jones Stocks Ready to Bounce Back
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AP


3 WORST-PERFORMING DOW JONES STOCKS READY TO BOUNCE BACK

 * (James Brumley)
 * Apr 15, 2022
 * 2 hrs ago
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(James Brumley)

Just because the Dow Jones Industrial Average (DJINDICES: ^DJI) is chock-full of
blue-chip stocks doesn't mean it's immune to sell-offs. The index sits nearly 7%
below January's peak, and at one point last month it was down as much as 12%
from that high. It also looks like it's trying to test last month's low again,
and for a handful of Dow names, the past three months have been even worse.

If you're a seasoned investor, you know these soft patches are ultimately buying
opportunities. You can't keep a good stock down forever. To this end, here's a
rundown of three of the Dow's worst-performing stocks of late. Each is ready to
bounce back for all the right reasons.



Image source: Getty Images.


1. GOLDMAN SACHS

On a comparative basis, the underwriting (IPO) market feels lackluster here. A
combination of inflation and Russia's invasion of Ukraine is taking a toll on
the economy and the market, causing some companies to postpone planned public
offerings and other dealmaking. EY (formerly called Ernst & Young) estimates the
first quarter's total initial public offerings fell 37% from year-ago levels,
while the total amount of money raised via public offerings fell 51%.




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This dried-up IPO market took a big bite out of Goldman Sachs' (NYSE: GS) bottom
line too. Although its first-quarter revenue and earnings topped analyst
estimates, that pleasant surprise was supplied by strength from its trading and
wealth management arms. Investment banking revenue slumped 36% year over year,
prompting a 48% decline in net earnings. Despite the beat, torn investors simply
let the stock drift sideways in the wake of the news, trying to figure out if
this is the shape of things to come.

All these numbers, however, paint a misleading picture of the current
underwriting market as well as Goldman Sachs' stock's woes.



Fact: The first quarter's IPO slump isn't a slump at all. It's just being
compared to the first quarter of 2021, which saw a massive number of
pandemic-postponed public offerings finally come to fruition. As EY pointed out
a year ago, Q1 2021's public offering activity was the most fevered it had been
in 20 years. And that strength persisted. EY adds that the fourth quarter's
public offerings reached levels not seen since the final quarter of 2007,
capping off what would be a record-breaking year for IPOs.



That's a tough act to follow.



At the same time, while the 24% pullback has been a painful one for Goldman
shareholders to ride out, the bulk of the 227% rally from March 2020's low to
last November's high is still intact.




Don't let a little profit-taking now lead you to the wrong conclusion here.
Goldman Sachs is expected to start growing again next year. The stock may start
to recover well before then.


2. MICROSOFT

Microsoft (NASDAQ: MSFT) shares are another victim of a little too much
euphoric-driven success in the midst of the COVID-19 pandemic, setting the stage
for profit-taking now that the effect of the coronavirus contagion has been
curbed. Specifically, following a 165% run-up between early 2020 and late 2021,
the stock's now sitting 18% under that peak.

The bullishness is completely understandable. With millions of employees
suddenly forced to work from home, employers needed online collaborations
solutions fast. In addition to its familiar office productivity software,
Microsoft also offers online video/voice conferencing, security, and other
options needed by remote workers. Now that the pandemic is fading away (or being
ignored), though, investors fear companies are rethinking the need for all these
work-at-home options.




The thing is, most of Microsoft's business isn't hyper-reliant on at-home
employees. Regardless of where they work, employees need access to software like
Excel or Word. And, while they don't necessarily need them as desperately as
they did a year ago, many companies are holding onto their online collaboration
and communication tools, just in case an unexpected disruption surfaces again in
the future.



Never even mind the fact that a huge chunk of Microsoft's business comes from
hybrid cloud platforms, video gaming, and operating systems. These are mostly
unaffected by where workers are actually doing their jobs.

This recent weakness is a chance to plug into Microsoft shares in front of what
analysts say will be sales growth of 18% this year, and 14% next year.


3. NIKE

Finally, add Nike (NYSE: NKE) to your list of beaten-down Dow Jones stocks that
could be ripe for a reversal.

It's not a name that needs much of an introduction. Nike, of course, is the
world's most recognized athletic apparel brand, with estimates suggesting it
controls anywhere from 40% to 60% of the global athletic shoe market. Even at
the lower end of the range, that's huge.



This dominance hasn't impressed investors much of late. Shares are down nearly
30% from record highs hit in December, with the pandemic's resurgence and fresh
geopolitical tensions -- particularly tensions involving China -- crimping
supply chains and straining ties with a key market for Nike; nearly 20% of its
sales are made in that market.

For all its challenges, though, Nike's got more working for it than against it.

Its ongoing shift toward greater self-sufficiency is one of the things working
for it. More than one-third of its revenue now comes from sales made directly to
consumers, bypassing third-party retailers that eat into profit margins. Another
edge Nike enjoys is its capacity to innovate. Not that it really needs it, but
the company recently confirmed it will be opening a new technology center in
2023 that will, among other things, think up ways to improve its customers'
experiences using artificial intelligence. Nike already changed the athletic
footwear game by letting consumers custom-build their own sneakers via a
platform called Nike By You.



Shares might need some time to reblossom, but it will be worth the wait.

10 stocks we like better than Goldman Sachs

When our award-winning analyst team has a stock tip, it can pay to listen. After
all, the newsletter they have run for over a decade, Motley Fool Stock Advisor,
has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to
buy right now… and Goldman Sachs wasn't one of them! That's right -- they think
these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of April 7, 2022

James Brumley has no position in any of the stocks mentioned. The Motley Fool
owns and recommends Goldman Sachs, Microsoft, and Nike. The Motley Fool has a
disclosure policy.



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