If you’ve got the stomach and patience for it, buying at a low could produce great long-term profits for your portfolio. There’s a lot of risk with buying a stock that has been falling in price, since there’s always the risk the decline could continue for some time. But if you know the business is a good one and undervalued, it may not be a bad idea to consider taking a calculated risk. Over the long term, stocks generally appreciate in value, so as long as you aren’t looking to try and make a quick profit, you’ll give yourself good odds of success by simply being patient.
One way to find stocks that have dipped is by looking at those that have recently reached a low. Below are three stocks that have been declining for months but that are still good buys for the future that you may want to have a closer look at.
Stars Group (TSX:TSGI)(NASDAQ:TSG) has declined more than 27% in just the past three months, as the bears have taken over and sent this once promising stock into a free fall. While the company had a disappointing quarter, it shouldn’t deter investors from the potential that the stock has over the long term, especially with the great job it has done thus far of growing its sales.
Recently, there was a big development that should have investors very excited about the stock’s long-term prospects as the Supreme Court paved the way for online sports betting to become legal in the U.S., and that could create significant opportunities for Stars Group. Earlier this year, the company acquired a U.K. betting site in the hopes of expanding its reach into sports betting, but the U.S. market could be even more lucrative.
The stock is already looking to be a good buy today, and any further decline in price could make it that much more attractive. Currently, the stock is trading around lows not seen since March. Stars Group has a lot of potential upside, and an opportunity to buy this low may not come again.
BCE Inc. (TSX:BCE)(NYSE:BCE) has been on a much more gradual decline than Stars Group as the telecom giant has dropped 13% in value since the start of the year, with no one big event causing a mass sell-off. Instead, investors have simply been bearish on the industry, as BCE and its peers have struggled to find much in terms of positive momentum.
With the stock trading right around its low for the year, BCE could be a great pick up, not only because of its potential to recover, but because its dividend yield is now up to around 5.6% due to the drop in price. And not only could you secure a high yield today, but BCE has a strong history of increasing its payout over time, meaning you’ll earn well above the current yield in the coming years if you just hold on to the stock.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor David Jagielski has no position in any of the stocks mentioned.