Microsoft (MSFT) and Chipotle (CMG) Hit Yearly Lows. Are They Stocks To Buy Now?

Buying low and selling high — it’s the stock market’s golden rule. Grab a cheap stock, ride it up, and cash out with fat profits. Sounds simple, right? But when a stock hits a 52-week low, it’s actually a gamble.

That dirt-cheap price might scream bargain, but it could also be a trap, sinking lower as the company bleeds. Stocks at yearly bottoms often signal they are in trouble: weak earnings, debt piles, or market panic are pushing its stock down. Jump in too soon, and you’re catching a falling knife and the losses will stack up fast.

Yet the flipside says those lows can be gold mines. A beaten-down stock, one that was pummeled by a one-off glitch or trampled by herd fear, might just be oversold, not dead. If its fundamentals are solid, such as if it has strong cash flows and preeminent market share, it is likely primed to bounce. 

Are they still risky? Of course. But the opportunity is bigger. The two stocks below recently hit their yearly lows, but these are winners that you can ride their losses higher into a win.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) has been a market darling for a decade and it has generated 962% in total returns for investors over that time frame compared to a 225% gain by the S&P 500. Yet after peaking at its all-time high last July, MSFT stock has been on a steady slide lower and has lost 17% of its value. The benchmark index is up 2.5% over that same period, a 20-point difference.

Shares are down 8% year-to-date and it recently hit its 52-week low of $377 per share as investors scrutinize its massive spending on artificial intelligence after Chinese AI lab DeepSeek reportedly produced a sleeker, more efficient model for significantly less. 

Microsoft’s Azure cloud services business, which has deeply integrated AI into its service, published a softer than expected growth outlook in Q2, offering up 23% gains versus the 30% increases anticipated. Although investors flinched, it is an overblown concern. Second-quarter revenue still hit $65.6 billion, up 10%, which beat estimates of $64.8 billion, with earnings of $3.09 per share topping analyst forecasts of $3.05 per share. The Cloud business at $38.9 billion, or 59% of sales, had Copilot adding 4% growth. 

MSFT stock trades at a P/E of 31, it’s not dirt-cheap, but is below its five-year average, and Wall Street is still predicting 15% long-term gains in earnings. While tech spending could slow, Microsoft has $71 billion in cash and short-term investments that, coupled with a strong record of returning value to shareholders, cushions any further downside risk, making the stock a solid buy.

Chipotle Mexican Grill (CMG)

Chipotle Mexican Grill (NYSE:CMG) is the second former high-flying stock to sink to a 52-week low that should be on your short list of stocks to buy. It also enjoyed an amazing run higher after a spate of food-borne illness outbreaks in 2015 sent shares spiraling down. Since 2017, it produced better than 800% returns for investors compared to the S&P 500 doubling in value.

Yet following its record-breaking 50-for-1 stock split in June 2024, CMG stock has lost a fifth of its value and recently hit an annual low of around $47.50 per share. But Mexican food hasn’t fallen out of favor, as fourth-quarter results make clear. Revenue hit $2.87 billion, up 13% and beating $2.84 billion forecasts, with earnings of $0.28 per share topping $0.27 per share estimates. Foot traffic was also up 4%, and new menu plays like smoked brisket are clicking.

So why is the stock down? Investors are worried growth is slowing as same-store sales of 5.8% were below Wall Street’s estimates of 6.2%, and with full-year comps at 7%, the end-of-year slowdown has them worried.

Chipotle has had to raise prices and there is more competition now in the maturing fast-casual market. Also, President Trump’s tariffs on Mexico could disrupt the restaurant chain’s supply lines of avocados, peppers, and the like. Plus, Starbucks (NASDAQ:SBUX) snagged ex-CEO Brian Niccol last summer while new boss Scott Boatwright is still proving himself.

Although Chipotle’s PE ratio of 44 sounds high, it is unusually low for the Mexican food outlet.The valuation is otherwise a little elevated, but with analysts forecasting 18% earnings growth over the next five years, CMG stock is a buy at these low prices.

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