Stocks are climbing out of the deep hole they dug in 2022, powered by hopes for a transformation from artificial intelligence (AI) and signs that the Federal Reserve’s interest rate hikes are finally over.

However, some stocks are still down significantly from their previous peaks, setting up buying opportunities. Two stocks, in particular, that look primed for gains are Meta Platforms (NASDAQ: META) and Walt Disney (NYSE: DIS). Keep reading to hear the buy cases for each one.

Image source: Getty Images.

This tech giant still has big growth potential

Keith Noonan: Meta Platforms stock has delivered incredible gains in 2023 and crushed the broad market. But even with the impressive rally, the social media giant’s share price is still down roughly 15% from its all-time high — and there’s a good chance the stock can reach a new peak in the not-too-distant future and go on to deliver additional wins for long-term investors.

Across Facebook, Instagram, WhatsApp, and its other platforms, Meta averaged 3.14 billion daily active users in the third quarter. The company also saw a strong rebound in advertising placement and engagement compared to the prior-year period. Ad impressions jumped 31% year over year, helping to offset a 6% decline in the average price per ad.

Meta’s revenue jumped 23% year over year to reach $34.1 billion in the third quarter. Meanwhile, total costs and expenses declined 7% year over year to $20.4 billion. Even with the company continuing to invest heavily in some long-term growth initiatives, the business is showing efficient and effective execution.

Thanks to the strong sales growth and cost-cutting initiatives, Meta’s net income skyrocketed 164% year over year to reach $11.6 billion. Expecting the company to sustain that level of growth going forward would be unreasonable, but there are good reasons to believe the tech giant can continue delivering healthy sales and earnings growth over the long haul.

Even though the digital ad market will continue to be subject to cyclical trends, its long-term growth prospects remain quite promising. And in addition to ongoing growth for the broader digital ad space, Meta’s ability to continue leveraging AI technologies should help it strengthen the value of its advertising platform.

Data by YCharts.

Trading at under 19 times next year’s expected earnings, Meta still looks like a worthwhile buy for investors seeking top social media, AI, and technology stocks.

A big name ready for a comeback

Jeremy Bowman: Disney stock has been stuck in Neverland for the last few years, it seems. The company has struggled with a botched CEO transition, bringing Bob Iger out of retirement to replace Bob Chapek a little more than a year ago. And it has also been challenged by the decline of linear TV like the rest of its legacy media peers.

However, after the stock recently touched a nine-year low, there are signs that Disney could finally be ready to make a comeback. Iger said his management team has finished fixing the business and is ready to start building again. That means honing its content production machine to make more box office hits, possible acquisitions, building out its flagship ESPN streaming service, and streamlining the business to prepare it for the future. These focus areas could also mean the company sells off some non-core cable networks and parts ways with its Indian TV business.

Disney recently started paying its dividend again after pausing it during the pandemic, fulfilling a key promise to shareholders and demonstrating confidence that profits have stabilized. Management has also worked to rapidly narrow losses in its streaming division and aims to drive a profit in the segment by the fourth quarter of fiscal 2024, which ends next September. In the fourth quarter of fiscal 2023, its loss from the direct-to-consumer segment shrank from $1.4 billion to $420 million.

Finally, with the writers and actors’ strikes now in the past, Hollywood is up and running again, putting another challenge behind the company.

Disney is bigger than ever before, and its parks division continues to crank out bumper profits. On a historical basis, the stock looks cheap, and shares are still down 55% from their peak during the pandemic. It shouldn’t take much to drive a recovery in 2024 given the company’s inherent competitive advantages in its theme parks and content library.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Meta Platforms and Walt Disney. Keith Noonan has positions in Walt Disney. The Motley Fool has positions in and recommends Meta Platforms and Walt Disney. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Original: META Feed: 2 Stocks Down 15% and 55% to Buy Right Now