2 Stocks to Buy Near Their 52-Week Lows

Recent developments have led to significant declines in the stock prices of Pinterest (NYSE: PINS) and Zoetis (NYSE: ZTS). Due to company-specific issues, both are currently not that far from their 52-week lows. The good news, though, is that Pinterest and Zoetis may be able to recover from their recent woes and deliver strong returns over the long run, which would make them steals at current levels.

Let's examine why these companies, despite recent setbacks, may still be worth it for investors focused on the long term.

1. Pinterest

Pinterest, a leading social media company, saw its stock price plummet following the release of its third-quarter earnings. The company's results weren't bad, but they fell short of the market's expectations, particularly on the bottom line. Pinterest's revenue grew by a strong 17% year over year to approximately $1 billion. Earnings per share were $0.13, up significantly from the $0.04 reported in the year-ago period but not as high as analysts wanted.

Image source: Getty Images.

In addition, Pinterest's guidance was somewhat disappointing. And to make matters worse, it is still dealing with tariff-related disruptions. The company generates revenue from ads on its platforms, but retail giants have decreased ad demand as they navigate the effect of tariffs. This problem could continue hindering Pinterest's progress in the near term. However, there are other excellent signs for the company.

First, Pinterest's average revenue per user (ARPU) increased 5% year over year to $1.78, with growth in this category being especially strong in international markets. Second, free cash flow is still moving in the right direction, jumping 30% year over year to $318.4 million. Third, Pinterest's ecosystem continues to deepen. It ended the period with 600 million monthly active users (MAUs), a 12% year-over-year increase.

Fourth, Pinterest is significantly enhancing its platform through artificial intelligence (AI)-focused initiatives. The company is improving search capabilities on its app and website, which is helping return more relevant, targeted content and greater engagement -- all of which can help boost ad revenue, even with the same number of MAUs.

Pinterest has also enhanced its ad platform through the use of AI, resulting in improved outcomes for advertisers. These efforts could continue to pay off and help offset the negative effect of tariffs. It's also worth noting that Pinterest's fastest-growing demographic is Gen Z. This highlights the company's appeal among younger users, which could drive long-term user growth.

The company's results may not have met the market's expectations this quarter, and Pinterest may suffer in the short term due to the effect of tariffs. But its long-term outlook remains intact. It's adding users at a steady pace, revenue is moving in the right direction, and it's consistently profitable. It's also improving profitability thanks to AI-focused changes that can boost ARPU. All these things make the stock a buy near its 52-week low.

2. Zoetis

Zoetis, a leading animal health company, has been struggling this year. This is partly due to falling sales of Librela and Solensia, which treat osteoarthritis (OA) pain in dogs and cats, respectively. These two medicines, which haven't been on the market that long in the U.S., were supposed to be growth drivers, but they are currently struggling.

The good news is that Apoquel, a medicine indicated to treat allergic itch in dogs and one of Zoetis' most important products, is still performing well despite new product launches that have altered the competitive landscape in this area. Apoquel contributed to Zoetis' dermatology revenue growth in the latest period.

Zoetis still sees significant prospects for Apoquel and the rest of its dermatology franchise, as it estimates that over 20 million dogs are left untreated or under-treated. It has reached only 12 million since entering this market about a decade ago. Zoetis' first-mover advantage and ongoing momentum in this area, despite increased competition, suggest it can capture a significant share of the large remaining market.

The company is collaborating with veterinarians to increase awareness of its OA products, which could potentially boost prescription rates for Librela and Solensia. Besides ongoing dynamics, Zoetis has been a leader in the industry for years and generally records better-than-average sales growth compared to its peers.

Zoetis has consistently innovated and launched new medicines that have helped it remain competitive and overcome challenges. Zoetis boasts 17 products that generate over $100 million in annual revenue and has over 300 product lines in its portfolio. The company will also benefit from long-term tailwinds as the pet population continues to grow.

Lastly, Zoetis is a terrific dividend stock, having increased its payouts by 426.3% over the past decade. Zoetis remains a buy, especially at current levels, and is particularly attractive for long-term dividend seekers.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pinterest and Zoetis. The Motley Fool has a disclosure policy.