Down More Than 30%: Wells Fargo Sees an Opportunity Brewing in These 2 Beaten-Down Stocks

The S&P 500 is up 20% since it hit bottom on April 8, but for now, the rally appears to rest on a narrow base. Tech stocks are leading the way, yet more than 50% of the index’s stocks remain below their 200-day moving average.

That uneven participation may give some investors pause, but it also signals a market ripe with selective opportunities. With many stocks still trading at a discount, the setup favors those willing to look beyond the headline rally and identify potential rebound plays.

Echoing that view, the analysts at Wells Fargo have pinpointed two such rebound candidates. Both stocks are currently down more than 30% over the past 12 months, offering significant upside potential if market breadth begins to widen. We’ve used the TipRanks database to dig into the details of these two Wells Fargo picks. Let’s take a closer look.

Sweetgreen (SG)

The first stock on our beaten-down list is Sweetgreen, a fast-food chain that offers customers a healthy option – salads and fresh ingredients, based on locally sourced producers and prepared to order. Sweetgreen takes a modern approach to the fast-food niche and uses modern tech to let customers order and pay by app, whether for dine-in or order-out.

In addition to its emphasis on healthy eating, Sweetgreen is also innovating in its food prep and delivery options. The company introduced its Infinite Kitchen several years ago, bringing automation to the fast-food salad makeline. The automated line promises to cut labor costs, an important advantage in light of moves in several states, particularly California, to raise minimum wages. There are currently 12 Infinite Kitchens in operation, with another 20 planned to open this year.

Along with automated food prep, the company also offers its Outpost service, a low-fee delivery service that will bring locally sourced, made-from-scratch, healthy foods to customers’ workplaces.

Sweetgreen was founded in 2006 and went public in 2021. The company had 186 restaurant locations in 2022, a figure that now stands at 253. Sweetgreen’s chain has reached into 23 states, and the company aims to expand its network to 1,000 locations in the next few years.

Despite the solid growth, Sweetgreen has yet to turn a profit. The stock has plunged by 61% over the past year, driven by falling store traffic, continued losses, and concerns that its prices are too high for today’s cautious consumers.

But not all is doom and gloom. Looking at the financial results, we find that Sweetgreen beat the forecasts on both revenue and earnings in 1Q25. The company brought in $166.3 million at the top line, a total that was up 5.3% year over year and $1.39 million better than had been expected. At the bottom line, Sweetgreen’s EPS loss of 21 cents was 1 cent per share better than the forecast.

Wells Fargo analyst Anthony Trainor covers this stock, and he points out the reason behind the stock’s lackluster performance, and why he remains optimistic about the company’s long-term prospects. He writes, “SG checks all the right boxes in restaurants (strong brand, high-teens unit growth, ~40%+ cash-on-cash returns, right side of health & wellness, leader in automation), but shares have been punished post negative 1H comps. While NT setup isn’t clean (tough compares & macro choppiness), we see shares re-rating ahead of a positive 2H inflection & return to +LSD% comp trends (on loyalty & seasonals) which should reinvigorate confidence in the underlying unit growth story.”

Based on this stance, Trainor rates SG shares as Overweight (i.e., Buy), and he gives the stock a $19 price target to suggest a one-year upside potential of 55%. (To watch Trainor’s track record, click here)

Overall, SG holds a Moderate Buy consensus rating, based on 12 recent analyst reviews that break down to 7 Buys and 5 Holds. With shares currently trading at $12.23, the $23 average price target leaves room for a potential 88% surge over the next 12 months. (See SG stock forecast)

Booz Allen Hamilton (BAH)

Next up is a ‘Beltway Bandit,’ one of the many government service contractors in the Maryland-Northern Virginia environs of Washington DC. These firms offer a wide range of services, including consulting, information tech, and outsourced management, mainly to US government entities. Booz Allen, which is headquartered in McLean, Virginia, is typical of the breed. The company has been in the consulting business, with both public and private customers, for more than a century.

Today, Booz Allen works with customers in government, Silicon Valley, venture capital, small businesses, and the startup sector, bringing to bear expertise in technology, cybersecurity, AI, networking, and specialized segments such as the digital battlespace. Over the past 10 years, the company has invested some $3 billion in technology and innovations, and its $100 million venture fund has supported 13 client companies. Booz Allen has more than 200 active AI projects online with the Federal Government, making it one of Uncle Sam’s largest AI contractors, and has another 300 projects in the cyber sector with both government and private customers. Booz Allen has a strong presence in the space industry, and is an important contractor for the Defense Department.

While Booz Allen is a heavy hitter in its arena, with a $12-billion-plus market cap and more than $11 billion in annual revenues, it still faces headwinds. The second Trump administration took office on many promises – including a mandate to cut government spending. Government contractors like Booz Allen have found themselves under a microscope, and have been hit by cuts in funding.

Meanwhile, Booz Allen missed the forecast on revenue in its last reported period, for fiscal 4Q25. The firm’s $2.97 billion in quarterly revenue was up 7.2% from the prior year, but missed expectations by $60 million. The company’s non-GAAP EPS, at $1.61, came in as expected.

Looking ahead to fiscal year 2026, management is predicting that annual revenue will grow by up to 4%, and that free cash flow will come in between $700 million and $800 million. Investors focused on the revenue miss and the guidance, and were less than impressed; the stock fell sharply after the fiscal Q4 earnings release. Overall, for the past 12 months, shares in BAH are down 33.5%.

However, Wells Fargo’s Matthew Akers, an analyst ranked in the top 2% of Wall Street stock experts, believes that the company is near the bottom and can look forward to better days. Following the most recent quarterly readout, the 5-star analyst wrote, “Investors were clearly disappointed with guidance, especially given BAH’s peers did not see a substantial impact from lower civil spending. We think BAH is now in a better place with the Administration given recent concessions, and while further cuts are possible, we think the stock near its 10-year low valuation prices this in and remain Overweight.”

Along with his Overweight (i.e., Buy) rating, Akers puts a $135 price target on BAH, showing his confidence in a 32% one-year gain for the stock. (To watch Akers’ track record, click here)

That’s the bullish outlook. The general Wall Street view of BAH is a Hold, based on 12 recent reviews that break down to 5 Buys and Holds, each, and 2 Sells. The shares are currently priced at $102.22, and the average price target of $129.90 implies that the stock will appreciate by 27% heading into next year. (See BAH stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.