The S&P 500‘s down 6% so far this year. Some companies within the index are down more, while some have fared better. Some shares have suffered but now could be perceived to be undervalued. Here are a couple that I’ve spotted amid the recent bout of volatility.
Just change it
The first one is sportswear giant Nike (NYSE:NKE). The stock’s fallen 39% over the last year, putting the share price at the lowest level since 2017.
The recent issues regarding trade tariffs mean that Nike’s production in Asia could have higher costs. It’ll then have to decide whether to pass the price increase on to customers or take a hit on profit margins. Yet I’m more optimistic now that trade deals can be struck, with President Trump stepping back from some of his early aggressive messages. I think Nike shares could jump if this translates into a more favourable outcome.
Part of the reason why I think Nike’s now undervalued is because of the change of strategy. The share price has dropped in recent years as the company has become less competitive and given up market share to new and old rivals. Yet under CEO Elliott Hill, it’s now focusing on returning to the core sports identity and enhancing product innovation.
Granted, it’ll take time before this turnaround translates to higher profits. But in terms of valuing the company, I think the change of direction means the stock’s undervalued based on where I think it could be in the coming year.
In my view, the main risk is if the transformation fails. This would cause investors to lose faith in the business and likely send the share price down even more.
Relying on the experts
Another idea is T Rowe Price Group (NASDAQ:TROW). The investment management company has been operating successfully since 1937, but has experienced a 22% share price decline over the past year. It recently hit five-year lows.
Fundamentally, the business makes money from investment advisory fees, based on the assets under management. The more money that clients entrust to the firm, the more revenue it generates. In 2024, it reported revenue of $7.09bn, a 9.8% jump from the previous year. Interestingly, one of the best years for the company was 2021, with pandemic-induced market volatility providing ample opportunity for investment advisory.
I think the same will manifest this year, as investors could have turned to the professionals over the past month for ideas on protecting their money. If this is correct, the share price could be due to rally when company updates show increased client activity.
Part of the reason for the fall in the past year has come with a shift away from active management towards passive. The business has experienced outflows from active mutual funds, which has worried some investors, as higher fees can be charged. Even with this being a risk going forward, I think the recent volatility could reverse this trend.
I think both US stocks are undervalued and are worthy of consideration by investors.
