3 Beaten-Down Quality Stocks We Love and 1 We Hate

Some of the best businesses in the market have had a rotten year for their shares. A falling price can mean the business is breaking, or that investors have marked it down further than the numbers justify. The quarterly filings help tell the two apart.

We screened the same companies as Tuesday’s cash-machine list: the ones we track, most of them in the S&P 500, leaving out financial firms and property trusts. We kept stocks at least 20% below their 52-week closing high as of Tuesday’s close, 27 October, that over their latest four quarters reported to the SEC grew revenue at least 10%, earned an operating margin of 25% or more, and turned at least 20% of revenue into free cash flow (cash from operations minus capital spending). Our three loves are among the cheapest of those that passed on price to free cash flow.

3 stocks we love

1. Adobe (ADBE)

Below its 52-week high: 31.0%. Adobe sells Photoshop, Acrobat and other creative and document software by subscription.

1. Revenue rose 12.0% to $25.97 billion in the 12 months to 28 August 2026. For a business this size, that is steady growth, not a collapse.
2. The operating margin was 35.7%, barely changed from 36.2%, and the gross margin was 89.3%. That suggests its pricing power is intact.
3. Free cash flow grew 10% to $10.59 billion, 40.8% of revenue, and Adobe spent $9.3 billion of it buying back shares.

At $248.36, Adobe is worth $96.7 billion, or 9.1 times free cash flow (an 11.0% yield) and 13.3 times net income of $7.28 billion. The stock fell 4.0% on Tuesday and is down 29.0% this year. That makes it the cheapest of the stocks that passed, by our count.

2. Intuit (INTU)

Below its 52-week high: 51.9%. Intuit makes TurboTax, QuickBooks and Credit Karma.

1. Revenue grew 13.9% to $21.45 billion in the fiscal year to 31 July 2026.
2. Operating income grew faster, up 19.5% to $5.88 billion, lifting the operating margin to 27.4% from 26.1%. The business is getting more profitable as it grows.
3. Free cash flow jumped 41% to $8.66 billion, 40.4% of revenue.

At $328.45, Intuit is worth $87.8 billion: 10.1 times free cash flow (a 9.9% yield) and 19.2 times net income of $4.57 billion. The stock has halved, down 50.4% this year, while every one of those numbers went up. We think that gap is too wide.

3. Booking Holdings (BKNG)

Below its 52-week high: 31.7%. Booking runs Booking.com, Priceline, Agoda and OpenTable.

1. Revenue grew 12.9% to $28.24 billion in the 12 months to 30 June 2026. Travelers are still booking.
2. The operating margin held at 32.9%, against 32.8% a year earlier.
3. Free cash flow was $9.54 billion, 33.8% of revenue, and Booking returned more than all of it: $10.53 billion of buybacks plus $1.28 billion of dividends.

At $150.14, Booking is worth $112.8 billion: 11.8 times free cash flow (an 8.5% yield) and 15.6 times net income of $7.21 billion. The stock is down 29.9% this year and 31.7% below its 9 January closing high of $219.68.

1 stock we hate

Nike (NKE)

Below its 52-week high: 45.2%. Nike sells sneakers and sportswear under the Nike, Jordan and Converse brands.

1. Revenue fell 4.3% to $11.21 billion in the quarter to 31 August 2026, from $11.72 billion a year earlier, and slipped 1.2% to $45.89 billion over 12 months. Sales are still shrinking.
2. Free cash flow fell 30% to $2.10 billion in the 12 months to 31 August, just 4.6% of revenue.
3. Nike paid $2.43 billion in dividends over the same 12 months, more than its free cash flow. The gap came out of the balance sheet.

To be fair, net income rose to $3.09 billion from $2.90 billion. But at $37.56, Nike is worth $55.7 billion, or 26.5 times free cash flow (a 3.8% yield) and 18.0 times net income. After a 41.0% fall this year, it still costs more than twice as much per dollar of free cash as Adobe, Intuit or Booking.

We’ll revisit this list in mid-November, once the third-quarter filings are in.