The S&P 500 index is a prestigious club comprising 500 of the most prominent American companies. A company that joins the S&P 500 only does so after careful consideration by a committee that aims to ensure the index includes only the cream of the crop.
But even stocks in the S&P 500 aren’t immune to adversity. Some S&P 500 companies are struggling even as the index sits near all-time highs. Some of these stocks are down from their former highs by as much as 43%.
Instead of chasing what’s hot, consider why these three struggling stocks made the S&P 500 in the first place. Their current struggles don’t change the fact they are wonderful buy-and-hold candidates worth considering for your portfolio today.
1. A strong play on artificial intelligence
Super Micro Computer (NASDAQ: SMCI) is one of the index’s newest members; it was added to the S&P 500 just a few months ago. The company began in electronic components in the early 1990s, but its primary business today is building modular server systems for data centers. Companies without the know-how or desire to custom-build data centers can turn to Super Micro Computer for turnkey systems.
Demand for artificial intelligence (AI) has corporations heavily investing in data centers, which helped accelerate Super Micro Computer’s revenue growth to 200% year over year in its most recent quarters. The stock has been a winner, surging over 200% over the past year. However, shares have cooled and are now down 31% over potential concerns about how sustainable this growth is.
While triple-digit growth won’t last forever, the future remains bright. Experts anticipate sustained investments in data centers over the coming years, which should steadily boost Supermicro’s business.
Super Micro Computer has noted it’s taking market share, which underlines its strong reputation in the field. Analysts believe the company’s earnings will grow by over 50% annually for the next three to five years. That makes the stock a potential bargain today at a forward price-to-earnings ratio of just 34.
2. A legendary consumer staples name getting back on…
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