These Blue Chip Stocks Haven't Been This Cheap in 3 Years

Billionaire investor Warren Buffett isn't afraid to buy struggling stocks. He likes opportunities such as when businesses get into what he calls "temporary trouble," saying that he wants to buy stocks "when they're on the operating table."

In the short term, it can be an unnerving situation for investors to buy shares of a company that looks to be in a tailspin. But if the fundamentals remain strong and the long-term growth prospects remain intact, there can be a huge opportunity for investors to cash in.

A couple of stocks that could fit that criteria today are United Parcel Service (NYSE: UPS) and Nike (NYSE: NKE) . These businesses are facing headwinds that could be temporary. And with their share prices down around multiyear lows, now could be an ideal time for value investors to scoop up these beaten-down stocks.

1. United Parcel Service

United Parcel Service, also known as UPS, has been struggling this year with its share price down around 6% since January. But its decline has gone on for longer than that. In fact, the last time the stock traded much lower than where it is right now was three years ago, back in 2020. That was when it reached lows below $120.

UPS stock may not get to those levels anytime soon as it has recently been rallying, but it's still a deeply discounted stock right now. It's trading at 21 times its trailing earnings, which may look expensive for the logistics company. However, the transportation company 's bottom line took a hit in its most recent earnings report, for the first three months of the year, as UPS incurred impairment charges and non-recurring expenses relating to transformations and consolidating its operations. The company has been trying to reduce costs and trimming its workforce as it faces lighter demand.

Consolidated revenue of $21.7 billion in the first quarter was down 5% from the same period last year. And with a possible recession looming ahead, UPS' struggles may not be over just yet.

The silver lining, however, is that these are still all just temporary factors weighing down the business today. UPS is still a top name in logistics and demand will return as economic conditions improve. While it may look to be in trouble right now, the stock's long-term potential remains promising. This is why if you're willing to hold on to the stock for multiple years, buying UPS right now could be a great move.

2. Nike

Another otherwise solid stock that's doing poorly this year is Nike. Down more than 33% thus far in 2024, the apparel stock has gone over a cliff recently. The last time the stock was trading this low was March 2020 during what proved to be a short crash due to concerns relating to the pandemic. Many investors likely regretted not loading up on the stock back then, as Nike's stock would end up prevailing afterward.

It could be a similar situation now. Today, the stock's problems stem from lackluster growth and a concerning outlook for the business. Nike's sales declined by 2% to $12.6 billion in its most recent quarter, which ended on May 31. The company has warned that the Chinese market isn't looking all that strong for its business and Nike also reduced its overall guidance for the year, now expecting sales for the current fiscal year (ending in May) to be down in the mid-single digits.

It's a concerning trend for Nike, but this too, is likely to be a short-term problem for the business. The company's strong brand commands a high price, and that may be difficult for consumers to justify paying at a time when their finances may not be all that strong. But this is where the stock is most appealing for long-term investors who are willing to ride out these troubling market conditions because they aren't likely to persist over a longer time.

At a price-to-earnings multiple of 19, Nike's stock is trading at a cheaper premium than usual. Investors who buy the stock now could be a getting a deal, especially if you're willing to hang on for years and can be patient with the stock.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Nike and United Parcel Service. The Motley Fool has a disclosure policy .