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Wall Street is a fickle place, with investors often punishing stocks harshly for what might seem like small transgressions. That's why some people take a contrarian view, actively trying to find investment opportunities that other investors have rejected. A good place to look for such ideas are stocks that have fallen near 52-week lows. Stanley Black & Decker (NYSE: SWK) and Nucor (NYSE: NUE) are worth a closer look right now.

Stanley Black & Decker is righting the ship

Stanley Black & Decker's stock price is within striking distance of its 52-week low. But the story here goes back much further than a single year. It starts in 2021, when the toolmaker posted record results thanks to a spike in demand driven by the coronavirus pandemic. Essentially, people stuck at home decided they wanted to spruce up their places. The company's adjusted earnings clocked in at $10.48 per share for the year.

And then things went horribly wrong for the industrial icon, with earnings declining in each of the next two years thanks to softening demand and rising inflation. Adjusted earnings settled at just $1.45 per share in 2023. But Stanley Black & Decker hasn't shoved its head in the sand. In fact, it started working on a turnaround plan as soon as it noticed a problem.

The effort has included selling non-core assets, reducing debt, streamlining operations, and rationalizing product offerings, among other things. Executives expect a major reversal on the earnings front in 2024, with adjusted earnings rising to between $3.50 and $4.50 per share. The company's first-quarter 2024 adjusted earnings were $0.56 per share, so it's on its way. But, the more important figure is probably the 590-basis-point gross margin improvement versus the first quarter of 2023. This improvement in profitability is what shows that management's turnaround efforts are taking hold.

So Stanley Black & Decker appears to be doing a decent job of getting back on track. The problem is that demand among consumers isn't rebounding as quickly as hoped, so Wall Street is concerned that the turnaround is going to falter. However, if you can handle a little uncertainty, you can own a Dividend King with a historically high 4% dividend yield. That's hard to complain about.

Nucor's business is volatile, but it is still a great company

Nucor's stock isn't quite as close to its 52-week low as Stanley Black & Decker's, but the big story is that the steelmaker's shares have fallen a dramatic 20% or so from their 52-week highs in April. That has them far closer to their lows than their highs, which actually makes some sense.

The steel sector is commodity driven, and prices haven't been particularly strong lately. First-quarter 2024 earnings came in at $3.46 per share, down from $4.45 a year ago. And the company recently guided for Q2 earnings to fall between $2.20 and $2.30 per share, which hints that things are getting worse, not better.

But that's just how things go in the commodity-driven steel sector. What investors need to focus on is the long term, and on that front, Nucor has been a huge winner. Not only is it one of the largest and most diversified steelmakers in North America, but it's built on modern electric arc steel mills. These are relatively easy to ramp up and down along with demand, which bolsters profitability through the cycle. And Nucor is increasingly using its own steel to supply its higher-margin specialty products businesses, which make things like building components. Nucor isn't just a steelmaker, and it continues to evolve its portfolio, getting more and more diversified every year. Lately, it has been working on ramping up its ability to supply the fast-growing data center niche with the steel it needs to rapidly build out new data centers.

If you like owning the biggest and best in the industries you invest in, then Nucor is the name to buy in steel. And steep sell-offs are usually buying opportunities with this company. Plus, like Stanley Black & Decker, Nucor is a Dividend King. That speaks volumes about the company's reliable business approach given the highly cyclical nature of the steel sector.

A fixer-upper and a misunderstood giant

To be fair, Stanley Black & Decker is going to be an acquired taste. Only more aggressive investors will probably want to buy it, but with a turnaround that appears to be going largely according to plan, it looks attractive again given its historically high yield and near-52-week low pricing. Nucor is an industry leader that investors tend to jump into and out of based on the steel sector's ups and downs. It's down now, but long-term investors should pay more attention to the underlying growth that's being created. Indeed, despite Nucor's recent earnings slowdown, its business model continues to help it excel.

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Reuben Gregg Brewer has positions in Nucor and Stanley Black & Decker. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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