5 stocks are near 52-week lows. Will they increase in value by 44% next year?
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Everyone loves a bargain. And it’s no different when it comes to buying stocks. In fact, picking undervalued stocks is an effective strategy for building long-term wealth.
Another way to identify the strongest is to look for stocks that are trading near their 52-week lows. In some cases, they may be unpopular due to a work or financial problem that may not last forever. In these cases, a strong recovery may be on the cards. But what is wrong with these five?
| Stock | The 52-week share price is low (p) | Current stock price (p) | Market cap (£m) | % below 52 week high |
|---|---|---|---|---|
| Barratt Redrow | 285 | 285 | 4,059 | 41 |
| Hostelworld Group | 100 | 101 | 125 | 32 |
| In the Beach Club (LSE:OTB) | 165 | 167 | 242 | 45 |
| YouGov | 184 | 186 | 218 | 53 |
| WH Smith | 555 | 555 | 709 | 51 |
Depth
Four of them suffered because of the war in the Middle East.
Fears that rising oil prices will increase liquidity and may lead to higher interest rates concern Barratt Redrow, FTSE 100 a house builder.
The travel disruption is boosting the share prices of Hostelworld, a travel company specializing in budget-friendly hostels and public accommodation, and WH Smith, an airport retailer. The latter is also trying to rebuild investor confidence following a major accounting error.
Similarly, yesterday (March 12), Ogwini warned that “a big drop” holiday demand, particularly in Turkey, Greece, Cyprus, and Egypt. As a result, the group is suspending its revenue guidance for the year ending 30 September 2026 (FY26).
In other words, it has no idea what the long-term impact will be. As the group itself says: “The timing of when the conflict will end and the nature of demand recovery in these areas is unknown.” Given the uncertainty, I don’t think it would make sense to invest at this time.
An uncertain idea
This is particularly unfortunate given that FY25 was the group’s best performer throughout the year and its impressive growth continued into the first two quarters of FY26. Until recently, many of the group’s key metrics were moving in the right direction, including volumes, average booking values, and their margins.
It reported FY25 adjusted earnings per share (EPS) of 19p, meaning its stock currently trades at 8.8 times historical earnings. It also reaffirmed its medium-term EPS target of 38.7p. Surprisingly, it has no debt (other than leases) on its balance sheet.
The team has invested heavily in their app and recently ported it to ChatGPT, opening the “new distribution channel” and show it“getting ready for the world’s first AI technology.“
As much as I love this team, it’s a milestone for me that can’t predict what will happen with their business. But when the situation becomes clear, I will revisit the investment case.
Our top five is YouGov. There are no particular consequences from what is happening in the Middle East other than fear of a global recession. However, there are concerns that artificial intelligence could harm its business.
The biggest benefits?
Of course, just because a stock is near its 52-week low doesn’t make it cash. Discovery cannot be confirmed.
And I’ll have to do more research before deciding if the five of us will go back. But if they all return to their one-year high, someone investing £1,000 today could see it grow to £1,440. This shows the huge potential returns that can be made by successfully identifying value shares.
