2 Magnificent S&P 500 Stocks Down 20% to Buy and Hold Forever

The S&P 500 is one of the most referenced measures in investing. This index includes 500 of the world's largest publicly traded companies and is often used as a proxy for how the overall stock market is performing. The index isn't just 500 random companies, but rather ones that are large enough and have met certain key criteria such as sustained profitability.

While companies in the S&P 500 are generally strong businesses, even the best can go through rough stretches. Using the index as a starting point and searching for stocks that have fallen can be an interesting way to look for investment opportunities. Here are two stocks in the S&P 500 that have fallen at least 20% and why they are worth buying now and holding forever.

Chipotle Mexican Grill

Mexican fast-casual restaurant Chipotle Mexican Grill (NYSE: CMG) has been among the best-performing restaurant stocks ever. A $1,000 investment at its initial public offering (IPO) would be worth $61,000 today. However, over the past month, the stock is down 22%. This quick drop is even more interesting considering there's been no major news or earnings reported.

Given the business results, today's price could be a compelling buying opportunity. In the most recently reported quarter, the first quarter of 2024, Chipotle's revenue grew 14% year over year while its earnings per share (EPS) increased by 24%. This was a continuation of what has been a multiyear stretch of growth on both the top and bottom lines.

CMG Revenue (Quarterly YoY Growth) data by YCharts

What's impressive about this is the fact that the revenue growth has come both from new stores and also steadily increasing comparable restaurant sales. In Q1, Chipotle grew its comparable restaurant sales by 7% and its total store count by 8%.

These results are in line with the last several quarters and demonstrate the strength of the business as well as the room it has to continue to grow. Chipotle has a long-term goal of reaching 7,000 stores, which would be more than double the current store count.

PayPal

When it comes to digital payments, PayPal (NASDAQ: PYPL) could be the best-known player in the space. Its namesake product was one of the earliest success stories when it came to online payments as well as peer-to-peer money transfers. Considering the company also owns Venmo, anyone who's sent or received money from a friend has used a PayPal product.

Despite its market share, the company itself has been on a bumpy road for the last several years. Between being acquired and then spun off by eBay and the roller-coaster ride during the pandemic, PayPal has had anything but a smooth path in the public markets.

But now, the company is under new management that is focused on steadying the ship. PayPal has shifted its focus from acquiring new customers to better engaging its highly engaged users. It's early days of this new strategy, but there are signs it's bearing fruit.

In Q1 2024, active accounts decreased by 1% year over year, continuing a trend seen over the last few quarters. This sounds bad but was expected as the company acknowledged it would be shedding less-engaged users.

On the flip side, payment transactions increased by 11% and transactions per active account grew by 13%. This demonstrated that even with a shrinking user base, the remaining accounts are engaged and increasing their use of the platform.

PayPal shares are down 22% from their 2023 high but the company seems to be getting back on track. There's a case to be made for stronger results moving forward and today's price may turn out to be a nice buying opportunity.

Jeff Santoro has positions in Chipotle Mexican Grill and PayPal. The Motley Fool has positions in and recommends Chipotle Mexican Grill and PayPal. The Motley Fool recommends eBay and recommends the following options: short July 2024 $52.50 calls on eBay and short September 2024 $62.50 calls on PayPal. The Motley Fool has a disclosure policy .