2 Stocks Down 52% and 30% to Buy Right Now

Source The Motley Fool

The stock market has been under pressure in 2025. Catalysts including China's DeepSeek R-1 model, trade war concerns, and other sources of macroeconomic uncertainty have all caused big sell-offs, and the S&P 500 index is down roughly 9% even after regaining some ground recently. Meanwhile, the more growth-oriented Nasdaq Composite index is down approximately 13.5% across that stretch.

While investors should be mindful of the added uncertainty and risks that can come with investing amid a volatile market backdrop, this year's sell-offs could create opportunities to build positions in stocks that can generate great returns over the long haul. With that in mind, read on to see why two Motley Fool contributors think these stocks are good buys after big valuation pullbacks in 2025.

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Keith Noonan (Reddit): Reddit (NYSE: RDDT) stock plummeted in February after the company published fourth-quarter results that arrived with weaker-than-expected user engagement metrics. The company's share price then continued to move lower in conjunction with trade-war developments and geopolitical risks. On the heels of these pressures, the stock is now down 52% from its high this year.

Despite the sell-off, Reddit managed to grow revenue 71% year over year to reach $427.7 million in the fourth quarter. Meanwhile, daily average unique users (DAUq) still increased 39% year over year to 101.7 million. That figure came in below the 103.1 million DAUq count called for by the average Wall Street estimate, but it still represented strong growth. Following its recent valuation pullback, Reddit stock looks like an underappreciated artificial intelligence (AI) play.

Crucially, Reddit has emerged as a popular search platform and results destination, because the platform houses a wide repository of user generated answers to questions, and good answers to questions are typically given priority thanks to a voting system.

Reddit is also licensing its data for application programming interfaces (APIs) and the training of AI models, allowing customers to access real-time data streams of information from the platform for use in behavioral analysis and building applications and algorithms. Citing a report from International Data Corporation, Reddit sees the market for AI (excluding China and Russia) growing at a 20% compound annual growth rate from 2024 through 2027 and reaching $1 trillion at the end of the forecast period.

The company is using AI to make the content it delivers to users safer and more relevant, and it plans to make additional moves to promote localized content to users on its platform. In doing so, management thinks that it can help bolster its growth internationally and expand its reach around the globe. With the stock still down big, Reddit looks like a worthwhile investment ahead of the publication of its first-quarter results on May 1.

Near-term headwinds for Hexcel remain, but so does long-term growth

Lee Samaha (Hexcel): Hexcel (NYSE: HXL) stock is down 30% from its high in 2025, and it's not hard to see why. The lightweight carbon fiber composite company's sales are a function of its customers' production, and its two largest customers are Boeing and Airbus, as well as their suppliers. That's wonderful when their production rates are booming, but not so good when supply chain issues are causing airplane production slowdowns.

Indeed, as Hexcel's CEO Tom Gentile said on the recent first-quarter earnings call, "2025 is turning out to be another year in which production rate increases for commercial aircraft will not meet initial expectations due to ongoing supply chain disruption."

As such, on the earnings call, Hexcel lowered its full-year sales, earnings, and free cash flow (FCF) guidance. The culprit is the Airbus A350 program, where Hexcel started the year expecting to deliver 84 shipsets of composites (each shipset on the A350 is worth $4.5 million to $5 million) to Airbus in 2025, but now expects to deliver just 68. It's not good news, and the market wasted no time pricing it in.

But here's the thing: Boeing and Airbus still have multiyear backlogs. Moreover, as Gentile noted, Hexcel can already support higher production rates. This means its cash flow will grow significantly when sales start improving, with an eventual increase in airplane production, because it doesn't need to ramp up capacity significantly.

The company also tends to source locally for its production in the U.S. and Europe, so tariffs, as they stand, aren't a significant issue (management estimates a hit of $3 million to $4 million a quarter, which it can offset with productivity improvements). Finally, the revised guidance for 2025 of adjusted diluted earnings of $1.85 to $2.05 and FCF of $190 million leaves the stock trading at about 25 times earnings and 20 times FCF in 2025. That's a good value for a stock with excellent long-term growth prospects.

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Keith Noonan has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Hexcel. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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