1 falling stock to buy and 2 to avoid

It’s best to buy stocks when they’re falling in value, as one of the most famous investing maxims goes: “Buy low, sell high.” However, companies that are going through a tough time in the market aren’t automatic buys. It’s essential, as always, to separate the wheat from the chaff. While stocks in general have performed well for most of the year, there are plenty of falling stocks to choose from these days.

Let’s discuss three of them: the one that seems attractive is CVS Health (NYSE: CVS)and two that are not worth investors’ hard-earned money are Chegg (NYSE: CHGG) And fuboTV (NYSE: FUBO)Here’s why.

The CVS Health Case

Health giant CVS Health has faced a variety of issues over the past two years. Here are two of the most significant.

First, sales of COVID-19 diagnostic tests and other coronavirus-related products are down sharply. Second, its Medicare Advantage division is seeing higher-than-expected activity, which is leading to higher-than-expected costs. CVS Health’s financial results have been lackluster (at best) recently, and worse, the company has repeatedly lowered its guidance. It did so again in the second quarter.

CVS Health now expects its fiscal 2024 adjusted earnings per share (EPS) to be in the range of $6.40 to $6.65; its most recent projection called for adjusted EPS of at least $7.00. CVS Health’s revenue for the quarter increased just 2.6% from a year earlier to $91.2 billion.

Why should investors care about CVS stock despite these issues? It’s worth noting that, as serious as they are, these are short-term issues. CVS likely won’t be facing the pandemic’s impact on its bottom line five years from now. At some point, that part of the business will stabilize. The same seems to be true for its Medicare Advantage division.

CVS Health has several long-term growth paths and a strong competitive advantage. The company’s business spans a broad range of the patient care journey, from primary care to prescription drugs and insurance. And with long-term trends like the aging of the global population, demand for these services will increase. CVS Health benefits from a strong brand as one of the largest pharmacy chains in the United States – it’s a brand that patients trust.

Finally, CVS Health is a solid dividend stocksThe company may not be doing well right now, but buying its stock while it’s down might seem like a genius move 10 years from now.

The case against Chegg

Chegg runs an online platform that offers a variety of services to help students excel in school. Its subscription service offers expert-level answers to homework and textbook problems in most disciplines. However, the company is in danger of becoming a bit of a dinosaur due to the advent of artificial intelligence (AI) chatbots like ChatGPT. After all, these nifty apps can answer questions, sometimes very complex (GPT-4 passed the bar exam), and write detailed essays in seconds.

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Why pay for Chegg…