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With the US stock market crashing by double digits earlier this month, opportunistic contrarian investors have begun asking what are the best stocks are to buy now?
Historically, some of the best investments are high-quality companies trading at a deep discount on their underlying value. But finding such opportunities isn’t always easy, especially when everyone’s looking in the same place. That’s why I almost always start my search among the businesses that have been beaten up the most.
Finding value in unloved stocks
Companies that get sold off aggressively can end up getting mispriced. With that in mind, here are five of the worst-performing US stocks over the last 12 months.
| Company | Industry | Market Cap | 12 Month Performance |
| Novo Nordisk (NYSE:NVO) | Pharmaceuticals | $217bn | -47.9% |
| Advanced Micro Devices | Semiconductors | $139bn | -42.1% |
| Merck & Co | Pharmaceuticals | $206bn | -35.4% |
| ASML | Semiconductors | $246bn | -29.5% |
| The Walt Disney Company | Media & Entertainment | $151bn | -21.9% |
Chances are, each of these businesses is getting caught in the panic-selling crossfire of the US tariff-induced market sell-off that started earlier this month. And while the subsequent announcement that tariffs are being paused for 90 days created a rebound, each of these businesses is still trading close to their 52-week lows.
However, just because a firm is getting sold off doesn’t instantly make it a bargain. Each is tackling notable challenges right now. As such, investors need to examine operational risks and potential rewards before jumping in. To demonstrate, let’s zoom in on Novo Nordisk.
The challenge of pharmaceuticals
As more people become more health conscious, Novo Nordisk is finding tremendous success with its GLP-1 weight loss drugs. In particular, Ozempic now has a 44% estimated market share, with demand growing at an accelerating pace. The impact of this is made perfectly clear in its latest set of earnings, which reported revenue and profits surging by over 30%.
With plenty of other drugs in the pipeline, this could just be the tip of the iceberg. However, like all pharmaceutical enterprises, Novo Nordisk isn’t immune to the challenges of clinical trials. And last December, shareholders were reminded of this when the results of its brand-new weight-loss drug, CagriSema, fell short of expectations.
While the drug appears to be effective, average weight loss came in at 22.7% over 68 weeks, versus the 25% Novo Nordisk was aiming for. That led to a steep double-digit sell-off, demonstrating that bad results from a clinical trial can cause pharmaceutical stocks to plummet. Nevertheless, given the enormous market opportunity of weight-loss drugs, such volatility may be a price worth paying, in my mind. That’s why I think Novo Nordisk’s recent slip could be a potential buying opportunity and deserves further research.
Looking at the other businesses on this list, there are a variety of challenges investors need to take into consideration.
Advanced Micro Devices is facing fierce competition from the likes of Nvidia, while ASML is caught in the middle of a brewing trade war between the US and Europe. As for Disney, subscriber attrition from its Disney+ streaming platform is causing concern.
Of course, each business also has promising long-term potential. So when looking for the best stocks to buy, investors must dig deeper to determine whether the risks are worth the reward.
