These stocks are cheaper than they were during the pandemic. Evercore ISI says buy them

96 of 100 S&P 500 stocks are trading below their pandemic low valuation, according to Evercore ISI, which compiled a 'Dogs of War' list of beaten-down names. Evercore highlighted five S&P 500 stocks that meet its criteria (below pandemic trough valuation, rated outperform, and short interest in the upper 90th percentile): Netflix (-39% vs pandemic low), Adobe (12-month forward P/E -63% vs pandemic low), Block (-62%), AMD (-16%) and Intuit (-24%). This is an analyst-driven trade/opportunity call that could support modest individual-stock rebounds but is unlikely to move the broader market without wider macro or credit-market developments.

Analysis

High short interest concentrated in names that trade below pandemic-era multiples creates a two-front opportunity: a near-term squeeze (days–weeks) driven by positioning dynamics and option gamma, and a medium-term re-rating (3–9 months) if revenue durability and margin expansion reassert themselves. Stocks with recurring revenue or structural secular demand (enterprise SaaS, subscription streaming, AI semiconductors) have mechanically higher asymmetry — limited permanent downside from durable cash flows versus large upside if multiples revert only partway.

Sector second-orders matter: for semiconductors, inventory digestion and foundry cadence can amplify earnings beats/misses (making AMD a volatility play tied to AI capex cycles), while for software/fintech the earnings lever is renewals and pricing power, not unit demand. Supply-chain shocks or a sharp capex reset would disproportionately hurt AMD in quarters 1–3, but sustained AI spending would re-rate it faster than broad tech.

Key catalysts and risks are time-horizon dependent: a positioning-driven bounce can occur within 1–10 trading days; fundamental validation (upgrades, positive guides, durable margin improvement) takes 3–9 months. Reversal triggers that would wipe out the thesis include sudden credit tightening or macro-led subscriber churn that forces multiple compression beyond pandemic troughs — those events would likely unfold over weeks to quarters.

The consensus mistake is treating “cheap vs pandemic” as uniform; it isn’t. Names with high-quality free cash flow and customer stickiness (ADBE, INTU) are under-owned by quant/CTA strategies and are the likeliest to see orderly multiple expansion, whereas highly cyclical or inventory-sensitive names (AMD) are better traded as event-driven volatility, not buy-and-hold re-rating candidates.

Key Decisions for Investors

• NFLX — Tactical long (days–weeks): buy a 6–8 week OTM call spread (e.g., 15–25% OTM) size to capture a 10–25% squeeze; cap premium paid to <1.5% portfolio weight. Risk: premium loss if no squeeze; Reward: 2–4x if short covering + sentiment re-rate.
• ADBE — 3–9 month re-rating trade: buy stock or buy Jan (9–12 month) LEAP calls, size 2–4% portfolio. Set stop-loss: -18% from entry, target +30–45% if multiple reverts toward peers. Rationale: resilient recurring revenue, low secular downside; hedge with small SPY put if macro deteriorates.
• AMD — Event-driven options play: sell a small portion of long-dated puts and simultaneously buy a nearer-term call spread to play asymmetric upside on AI capex beats; keep net delta modest. Timeframe: 1–6 months. Risk: inventory-driven guidance miss → large loss; Reward: convexity into data-center demand ramp.
• INTU — Income-over-time play: sell covered calls or sell 3–6 month put spreads (cash-secured) sized to create yield ~3–6% over period, target effective entry ~15–20% below today. Timeframe: 3–12 months. Rationale: monetizable cash flows and high likelihood of modest multiple recovery.
• Portfolio defense — Hedging: buy 2–4% notional QQQ or sector puts (6–12 weeks) to protect against a macro-driven reversal that would compress multiples across the group; reduces tail risk of correlated downside while keeping directional idiosyncratic trades active.