2 S&P 500 Stocks (CMG, FTNT) Down Over 30% to Buy Now

Wall Street has pushed the stock market to fresh highs in August, driven by impressive earnings growth and guidance, as well as growing optimism that the Fed will cut rates twice to close out 2025. Despite stellar climb off the market’s April lows, some great S&P 500 stocks are down big in 2025, including Chipotle and Fortinet.

The stock market bulls are trying to hold their ground near the Nasdaq’s short-term 21-day moving average heading into the final week of August, which includes Nvidia's earnings release. That said, the stock market is likely due for a larger, healthier pullback to help recalibrate valuations a bit and blow away some of the froth.

Thankfully, investors don’t have to wait for the next leg down to buy strong stocks at deep discounts. Today’s Full Court Finance at Zacks explores two beaten-down S&P 500 stocks, Chipotle Mexican Grill and Fortinet, trading at least 30% below their highs that investors might want to buy as the benchmark trades near its peaks.

Both Chipotle and Fortinet remain strong companies with durable businesses that are finding support at their long-term 200-week moving averages. The 200-week moving average was one of Charlie Munger’s favorite technical indicators.

Warren Buffett’s longtime right-hand man, who passed away in 2023, once said: “If all you ever did was buy high-quality stocks on the 200-week moving average, you would historically beat the S&P 500 by a large margin over time.” The chart above shows that the bulls defend the 200-week at the Covid selloff, in the 2022 downturn, and the rapid selloff at the end of Q1.

This backdrop makes the two beaten-down S&P 500 stocks we dive into enticing buys heading into September. 

Buy CMG Stock On the Dip for Value and Huge Upside

Chipotle Mexican Grill CMG stock has dropped 37% from its June 2024 peaks on the back of fading comparable restaurant sales growth and a declining earnings outlook. CMG gapped lower in late July after its Q2 comps dropped 4% YoY. It also lowered its fiscal 2025 same-store sales guidance to flat.

Higher costs are hurting its bottom line, while customers are finally pulling back after four years of huge growth as they struggle with lingering inflation. The fast-casual burrito powerhouse is focused on highlighting its value proposition to diners. Chipotle’s typical chicken bowl or burrito costs around $10, which is less than most fast-casual rivals and many fast-food restaurants such as McDonald’s.

Despite the near-term setbacks, which include an extremely difficult to compete against stretch (it averaged 10.5% comps growth in the past four years), Chipotle remains one of the titans of the fast-casual restaurant industry that’s not going out of style. And its fresh ingredients and healthier options remain a long-term winning pitch.

CMG is projected to grow its revenue by 7% in 2025 and 13% next year to reach $13.67 billion (following 15% average growth in the past five years). It is expected to expand its adjusted earnings per share (EPS) by 8% and 18%, respectively. Plus, its earnings revisions have held up since its Q2 release after sliding for the past year.  

Chipotle stock skyrocketed roughly 1,300% in the past 15 years to quadruple its industry and crush the S&P 500’s 530%. Yet its 37% drop from its highs has it lagging the benchmark in the past five years. The stock found support at its 200-week moving average and its pre-2024 breakout peaks.

The restaurant stock’s selloff, coupled with its strong earnings outlook, has it trading at a 65% discount to its highs and 29% below its median at 32X forward 12-month earnings. Along with its $43 a share price, Chipotle trades at some of its cheapest valuation levels in the past 15 years. 

Is Cybersecurity Stock FTNT a Must-Buy Down 33%?

Fortinet FTNT stock tanked after it reported Q2 earnings results on August 6. The selloff was sparked by worries that Fortinet’s firewall upgrade cycle—a vital growth driver—is peaking after management revealed during its earnings call that it’s now 40% to 50% complete.

Investors appear concerned that FTNT’s progress hasn’t led to better financial outcomes so far and fear future expansion will be more difficult.

Thankfully, the cybersecurity standout still raised its 2025 billings guidance midpoint by $100 million, and its earnings outlook remained flat. The global cybersecurity company that provides a broad portfolio of security solutions is projected to expand its earnings by 6% in 2025 and 10% next year, on 13% and 11%, respective revenue expansion.

Fortinet’s estimates mark a slowdown compared to its recent EPS expansion, but match its 12% sales growth from last year. Plus, FTNT has topped our earnings estimate for five years in a row, and cybersecurity is only growing more important by the day in an economy where all data is digital.

FTNT is trading roughly 33% below its early 2025 highs even though is has skyrocketed 3,700% in the past 15 years vs. Tech’s 740%. The cybersecurity standout also doubled Tech in the past decade, even though Tech trades just below its all-time highs.

Fortinet found buyers at its 200-week moving average and the top of its pre-2024 breakout range. The stock also trades at historically oversold RSI levels.

The tech stock is trading over 80% below its highs and at a 50% discount to its 15-year median at 34X forward earnings. In fact, Fortinet’s fall and its strong earnings growth outlook has FTNT trading at all-time lows. 

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This article originally published on Zacks Investment Research (zacks.com).

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