2 Stocks Down 90% and 37% to Buy Now

It would be nice if stocks perpetually climbed higher and higher. Sadly, though, no stock is immune from temporary price dips. Disconcerting as this may be, savvy investors know that this often presents great buying opportunities.

While the S&P 500 recently set a historic high, many stocks aren’t enjoying the same cause for celebration right now. Rivian (RIVN 1.04%) and Delta Air Lines (DAL 2.07%), for example, are two stocks that have plunged considerably from their all-time highs. Below, two fool.com contributors discuss why these stocks are great buys right now despite their lackluster performances.

Now’s the time to hitch a ride with Rivian

Scott Levine (Rivian): It’s been a while since Rivian had investors’ hearts racing with excitement. Shares of the upstart electric-vehicle (EV) company are down about 90% from the all-time high it reached shortly after its initial public offering in November 2021. The stock’s massive pullback, however, presents an excellent opportunity for patient investors who have time to wait for the company’s growth plans to play out.

While Rivian has hit some potholes recently, some catalysts can catapult the stock higher. For one, Rivian announced in December that it had inked a deal with AT&T that will see the telecom company add Rivian’s commercial vans and R1 vehicles to its fleet, starting in early 2024. Although the deal is a pilot program, it may translate to a more substantial supply agreement if it’s successful and may open the door to future supply deals with major corporate customers.

The major event that could charge up investors’ enthusiasm for Rivian stock, however, is the company’s development of a new production facility in Georgia, where it expects to break ground this year. Complementing the company’s current facility in Illinois, the new manufacturing plant in Georgia, where R2 vehicles will be built, will have an annual production capacity of 400,000 vehicles.

Rivian plans on producing its new R2 vehicles at the facility in the Peach State. On March 7, the company is hosting an event where it will debut the R2, a more affordable alternative to its R1 electric truck.

Although there’s a lot of potential with Rivian stock, it’s not for the faint of heart. As a growth company trying to gain a prominent foothold in the competitive EV market, Rivian has a rocky road ahead of it — but that’s not to say that it’s insurmountable.

With all the skepticism baked into the stock price right now, patient investors who are comfortable with a more speculative investment should strongly consider powering their portfolios with Rivian.

Delta Air Lines is 37% off its all-time high

Lee Samaha (Delta Air Lines): Investors sold off the stock in mid-January following the company’s fourth-quarter earnings and full-year 2024 guidance. The main concern appears to be a combination of slowing growth and rising non-fuel costs that were baked into the company’s first-quarter and full-year guidance.

For example, management forecast revenue growth of 3% to 6% for the first quarter, with non-fuel cost per available seat mile (CASM) up 3%. These figures were worse than previously expected, and management lowered its full-year guidance to earnings per share of $6-$7, compared to prior guidance of above $7.

While the news is disappointing and airlines do face some ongoing uncertainty due to the slowing economy, it shouldn’t detract from the fact that the industry continues to recover from the lockdowns, and Delta is an excellent value.

For example, the low end of the company’s earnings guidance means the stock trades at seven times this year’s estimated earnings, while the low end of its free-cash-flow (FCF) guidance of $3 billion to $4 billion translates to an estimated price to free cash flow ratio of nine for 2024.

The reason for these low valuations is probably Delta’s net debt of $21.4 billion at the end of 2023, which is a large figure, compared to its market cap of $25.4 billion. The market is stressing that an unexpected downturn in the air travel market could lead to a slump in cash flow and put financial pressure on the company.

While that could happen, the reality, at least for now, is that consumers still want travel experiences and corporate travelers are coming back. As such, Delta looks attractively priced on a risk/reward basis, and investors who are confident in the outlook for the U.S. economy will find the stock interesting.

Should you ride with Rivian and Delta Air Lines stocks now?

On the land and in the sky, Rivian and Delta Air Lines are two companies that may be out of favor right now but should not be completely forsaken. Those comfortable with taking on a higher-risk investment in the hopes of procuring a higher reward would be smart to kick the tires on Rivian stock right now, digging in deeper to see if it would be a good fit for their portfolios. Delta Air Lines, moreover, currently looks like a bargain and may appeal to value investors looking for a blue chip stock.