Just change it

The first one is sportswear giant Nike (NYSE:NKE). The stock’s fallen 39% over the last year, putting the share price at the lowest level since 2017.

The recent issues regarding trade tariffs mean that Nike’s production in Asia could have higher costs. It’ll then have to decide whether to pass the price increase on to customers or take a hit on profit margins. Yet I’m more optimistic now that trade deals can be struck, with President Trump stepping back from some of his early aggressive messages. I think Nike shares could jump if this translates into a more favourable outcome.

Part of the reason why I think Nike’s now undervalued is because of the change of strategy. The share price has dropped in recent years as the company has become less competitive and given up market share to new and old rivals. Yet under CEO Elliott Hill, it’s now focusing on returning to the core sports identity and enhancing product innovation.

Granted, it’ll take time before this turnaround translates to higher profits. But in terms of valuing the company, I think the change of direction means the stock’s undervalued based on where I think it could be in the coming year.

In my view, the main risk is if the transformation fails. This would cause investors to lose faith in the business and likely send the share price down even more.

Relying on the experts

Another idea is T Rowe Price Group (NASDAQ:TROW). The investment management company has been operating successfully since 1937, but has experienced a 22% share price decline over the past year. It recently hit five-year lows.

Fundamentally, the business makes money from investment advisory fees, based on the assets under management. The more money that clients entrust to the firm, the more revenue it generates. In 2024, it reported revenue of $7.09bn, a 9.8% jump from the previous year. Interestingly, one of the best years for the company was 2021, with pandemic-induced market volatility providing ample opportunity for investment advisory.

I think the same will manifest this year, as investors could have turned to the professionals over the past month for ideas on protecting their money. If this is correct, the share price could be due to rally when company updates show increased client activity.

Part of the reason for the fall in the past year has come with a shift away from active management towards passive. The business has experienced outflows from active mutual funds, which has worried some investors, as higher fees can be charged. Even with this being a risk going forward, I think the recent volatility could reverse this trend.

I think both US stocks are undervalued and are worthy of consideration by investors.

The post 2 undervalued S&P 500 shares that could be about to pop higher appeared first on The Twelfth Magpie.

Potential in payments

PayPal (NASDAQ:PYPL) is down 12% in the past month. Over a longer one-year period, it’s up 10%. The global digital payments platform generates revenue through multiple streams. Most of it comes from transaction fees, charged to merchants when payments are made. It also makes money from foreign exchange, premium services and credit provisions.

I’ve put the stock on my watchlist because I think it could do well this year. CEO Alex Chriss has recently focused on improving profitability by cutting operational costs and enhancing AI-driven automation. I like this push to make use of new tech, such as integrating AI-powered fraud detection and smart payment solutions. Ultimately, this should drive deeper engagement with customers and make them more comfortable to spend more using PayPal.

One risk is the increasingly competitive payments sector. It’s no longer enough to offer a good payment solution. Other companies are providing more add-ons and enhancements to woo clients. PayPal needs to focus on constantly innovating in order to not get left behind.

Backing active management

Another company on my list is T Rowe Price Group (NASDAQ:TROW). The stock has taken a 14% hit in the last month and is down 19% in the last year. Last week it hit fresh 52-week lows.

One reason for the drop is that investors have increasingly favoured low-cost index funds and exchange-traded funds over actively managed funds like T Rowe Price offers. After all, given the performance of the past couple of years from the S&P 500, some have decided to buy an index tracker.

However, I think this may change this year. The sharp drop in the S&P 500 shows that an index tracker might not be the best move during volatile times. Rather, this is the environment where active stock-picking can really outperform. Further, I expect the US Federal Reserve to continue cutting interest rates this year. With a lower base rate, more money should move out of cash and into the stock market. This could help to increase the assets under management for T Rowe Price.

Of course, I do have concerns with the stock. With a lot of uncertainty at the moment around tariffs, as well as ongoing conflicts in Europe and the Middle East, investors might continue to move money out of T Rowe Price and sit in cash. This would be negative for company revenues.

I have both growth shares on my watchlist right now. I’m going to monitor how the S&P 500 performs over the coming few weeks. If the sell-off shows signs of easing, I’d strongly consider buying these two for my portfolio.

The post As the S&P 500 enters correction territory, here are the growth stocks I’m eyeing appeared first on The Twelfth Magpie.