No bull for the ‘dirty dozen’
These 12 stocks missed the boat during epic rally
Twelve stocks in the Standard & Poor’s 500 have fallen since the low on March 9, 2009, a painful reminder that not even an epic bull market can overpower company and industry woes.
Alternative-energy company First Solar, gold miner Newmont Mining, office goods retailer Staples and cosmetics seller Avon are among the “dirty dozen,” the stocks that missed out on what has been a remarkable nearly 200% market rally from the lows of five years ago. Anyone who owned these stocks not only whiffed on the rally but has enviously watched other investors’ portfolios soar to new highs.
“If your stocks didn’t triple, you didn’t do as well as the market,” says Howard Silverblatt of S&P Dow Jones Indices. “Not all stocks have come back.”
An examination of the dirty dozen stocks shows that they fall into a number of categories, including:
Retailers struggling with
online rivals. If there has been an area of the economy that’s been hammered by online commerce, it’s retailers. Staples and Avon have all been struggling to find their way in a world where consumers are willing to wait for goods to be shipped, in exchange for lower prices and greater selection. Staples and Avon are down 22% and 0.1% from March 2009 respectively.
Commodity plays. Select companies involved in extracting commodities from the earth have been laggards. Their underperformance is a bit of a remnant of the fact that investors were commodity-crazy in 2008 and pushed prices up. Newmont Mining is down 35% from March 2009. Investors see the company’s cost structure as too high, says Bill Selesky of Argus Research. Coal miner Peabody has been hammered by metallurgical coal prices falling 50% from their peak of $300 per metric ton in 2011, says Kristoffer Inton of Morningstar.
Lagging growth. Safety and security are out with inves- tors, who are on a search for growth. Utilities stocks such as Exelon, FirstEnergy and Frontier have seen their shares left behind, as investors aren’t satisfied just with a big dividend. Revenue at Exelon is expected to rise 1.5% in 2014 but fall 4.1% in 2015, says Christopher Muir of S&P Capital IQ. “Big names with no growth are being left behind,” says Scott Black of Delphi Management, not referring to any particular stock.
There are also company-specific issues. First Solar was a stock darling in 2009 that soared to $108 a share, only to pull back when reality set in with traders. And Abbott Laboratories’ stock price took a hit after spinning off part of its business in a separate stock, AbbVie.
But going forward, the odds of investors making the wrong choices are even greater, says Sam Turner of RiverFront Investment Group: “The market’s path of least resistance is up, but it will be difficult for (stocks) that aren’t delivering.”