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2 Strong Stocks Trading 30% Below Their Highs to Buy in December

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Today’s episode of Full Court Finance at Zacks dives into where the stock market stands to start December and where we could be headed as we close out 2023. The episode then discusses why investors might want to consider buying Global Payments (GPN - Free Report) and DexCom (DXCM - Free Report) stock right now for long-term growth, with both trading at least 30% below their record highs.

The Nasdaq slipped slightly on Thursday, though its slide doesn’t appear to warrant too much alarm following two weeks of sideways movement after the massive run since the end of October. Some selling is comforting since it helps cool things down to start the final month of 2023.

The market could face more selling pressure in the near term, with the Nasdaq sliding below overbought RSI levels after failing to break above its summer 2023 highs. Markets never go straight up, and there will always be reversions back toward key moving averages such as the 21-day, 50-day, and 200-day throughout bullish periods.

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Thankfully, it appears that more investors are attempting to position themselves on the right side of a possible rally toward all-time highs in the coming months as Wall Street looks ahead to rate cuts.

Global Payments ((GPN - Free Report) )

Global Payments is a top payments technology firm that operates three reportable business segments: Merchant Solutions, Issuer Solutions, and Consumer Solutions. The company’s various offerings do everything from enabling its customers to accept card and digital-based payments to helping manage their card portfolios and beyond. The firm has made various acquisitions over the years, including its roughly $4 billion deal to buy EVO Payments, which closed in March 2023.

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GPN lands a Zacks Rank #3 (Hold) right now, with its earnings revisions moving sideways. But Global Payments beat our Q3 earnings estimate on Halloween. Current Zacks estimates call for its adjusted earnings to climb 12% in FY23 and then jump another 14% in FY24 on the back of 7% higher revenue growth each year.  

Global Payments has climbed 267% over the last 10 years vs. the Zacks tech sector’s 242%. This outperformance came even though GPN shares haven’t recovered much ground after their prolonged tumble. GPN stock is still down around 45% from its 2021 highs and up only 17% in 2023 vs. Tech’s 45%.

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Global Payments trades 21% below its average Zacks price target and it is back above its 200-day and its 50-day moving averages. GPN is also crucially trading above its 50-week moving average.

On top of that, the stock trades at a 65% discount to its 10-year highs, 50% below its median, and 60% under the Zacks tech sector at 10.6X forward 12-month earnings. GPN is currently trading near its decade-long lows on the forward earnings front. GPN also pays a dividend and 80% of the brokerage recommendations Zacks has are “Strong Buys.”

DexCom, Inc. ((DXCM - Free Report) )

DexCom makes continuous glucose monitoring systems for people with diabetes. DexCom’s addressable market is expanding even though 1 in 10 Americans already have diabetes because far more currently have prediabetes, according to the CDC. Diabetes is also on the rise outside of the U.S. Overall, DexCom’s devices are part of a wave of connected health technologies that should become standard care.

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DXCM boasts an impressive history of EPS beats, including a 47% beat on October 26. Its positive earnings outlook helps it earn a Zacks Rank #2 (Buy) right now. DXCM is projected to post 24% sales growth in 2023 and another 18% in FY24 to hit $4.24 billion next year, which comes on top of 26% average expansion during the trailing three years. On the bottom line, DexCom is projected to grow its adjusted earnings by 64% and 18%, respectively.

DexCom stock has skyrocketed over the last 20 years and soared 1,200% in the last 10 years vs. the S&P 500’s 160%, which includes a 240% run during the past five years. Still, DXCM trades roughly 30% under its peaks and 15% below its summer 2023 highs.

The stock found support around its 50-month moving average not too long ago and climbed back above that long-term level recently. DexCom shares have also mounted a comeback above their 200-week and 50-week moving averages, as well as their 200-day and 50-day.

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DXCM trades at a 20% discount to its three-year median at a PEG ratio of 2.1 and near the Tech sector’s 1.9. DexCom also announced a $500 million share repurchase program when it reported its Q3 results. Investors with a long-term outlook might appreciate that it has a strong balance sheet, and 17 of the 19 brokerage recommendations Zacks has are “Strong Buys.” 

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