Why Wall Street Is Betting on These 3 Comeback Stocks

While the S&P 500 gained over 6% to reach record highs in the first half of 2025 despite economic turbulence, several prominent U.S. securities significantly underperformed, potentially offering attractive buying opportunities. UnitedHealth Group (UNH) saw shares drop over 40% due to earnings misses and a fraud investigation, though analysts see turnaround potential and competitive valuation. Edison International (EIX) declined over 22% amid wildfire risks and regulatory uncertainty, yet analysts project earnings growth and a strong dividend yield. Salesforce (CRM) shares fell 14% but are demonstrating improving profitability and growth from new AI offerings, suggesting building momentum for these value plays.

Analysis

Despite the S&P 500 achieving record highs with a 6% gain in the first half of 2025, several prominent companies have significantly underperformed, potentially creating value opportunities. UnitedHealth Group (UNH) has experienced a severe decline of over 40% year-to-date, pressured by a first-quarter earnings miss, surging medical costs, CEO departure, and an ongoing fraud investigation. Analysts anticipate a further year-over-year EPS dip of over 20% in the second quarter. However, mitigating factors include a recent dividend increase, the strategic sale of its Banmedica unit, and a historically low valuation with a P/S ratio of 0.7 and a trailing P/E of 12.9. Edison International (EIX) shares fell over 22% in the first half, primarily due to wildfire-related volatility and a significant regulatory overhang from the proposed SB 254 bill, which could limit price increases and impose new costs. Despite this uncertainty, analysts project nearly 17% EPS growth for the next year, and the stock offers a compelling 6.60% dividend yield. Salesforce (CRM) shares declined 14% but show signs of building momentum through a successful pivot to profitability, improving margins, aggressive share repurchases, and a new dividend. Critically, its quarterly data cloud and AI revenue more than doubled year-over-year, supporting improved forward guidance.

Key Decisions for Investors

• Investors could consider these underperforming large-caps as contrarian opportunities, but must carefully weigh the distinct, company-specific risks against the potential for a valuation rebound.
• For UnitedHealth, the investment case hinges on catalysts for stability, such as a resolution to the fraud investigation or clarity on medical cost trends, as its current valuation appears deeply discounted.
• Edison International represents a binary play on regulation; the position is attractive for income-focused investors given its 6.60% dividend yield, but capital appreciation is heavily dependent on the failure or significant amendment of the SB 254 bill.
• Salesforce appears to be a fundamentals-driven recovery story; investors should monitor for sustained growth in its AI and cloud segments to validate that its turnaround is gaining traction and supports its capital return strategy.