The three most interesting losers of the S&P 500 index in 2024
The first six months of 2024 brought a 17% rise in the S&P 500, suggesting it could be another strong year for the markets. Although many stocks in this index have delivered positive news, some companies have experienced significant disappointment. This article will therefore focus on three stocks that have struggled with the worst returns in 2024, but are still of interest to investors.
Walgreens Boots Alliance: Down 57%
Walgreens
WBADrugcompany Walgreens Boots Alliance $WBA-0.6%"boasts" the title of worst stock on the S&P 500 in the first half of 2024. Unfortunately, even at the beginning of the year, this company was a likely candidate for that unflattering title.
In January, the company cut its dividend in half, one of the first actions of new CEO Tim Wentworth, who is trying to get the company back on its feet. His task isn't easy, as the company still pays a (albeit reduced) dividend, invests in a costly healthcare strategy that includes opening primary care clinics, and its core business typically generates low margins.
Wentworth admitted that "the current pharmacy model is not sustainable" and that the company is considering closing up to one-quarter of its 8,600 U.S. stores. Although sales rose a modest 2.6% in the quarter ended May 31, the company cut its forecast for adjusted earnings this year, citing "worse-than-expected market conditions in the US".
There's no reason to expect a turn for the better in Walgreens stock anytime soon. Wentworth has a tough task ahead of it to make the drugstore chain a better business. Investors are better off not waiting to see the outcome of this effort - this is an extremely risky stock. It is possible that management will soon cancel the entire dividend.
Lululemon Athletica: down 42%
Thesecond-worst S&P 500 stock this year is Lululemon $LULU+0.7%. The luxury apparel company isn't much of a bargain at a time when consumers are struggling to pay their bills. Lululemon's business results still show decent growth, but it's not the kind of growth investors would like.
In the quarter ended April 28, the company reported sales of $2.2 billion, up 10% year-over-year. Comparable sales were up 7% after excluding the impact of foreign exchange rates. However, the outlook for the current quarter predicts revenue growth between 9% and 10%.
Had it not been for the company's high valuation, Lululemon's stock might not have fallen as dramatically as it has this year. As a result of this selloff, the stock now trades at a much more acceptable earnings multiple of 24 times. At the beginning of the year, it was more than 50 times.
Intel: down 29.9%
Intel
INTCThe last disappointment on this list is Intel $INTC-3.3%. The chipmaker's strategy to increase production in the U.S. hasn't yet convinced investors that it's a profitable long-term move.
In the quarter ended March 30, the foundry division posted an operating loss of nearly $2.5 billion, and its revenue fell 10% year-over-year.
CEO Pat Gelsinger predicts the foundry division has a difficult road ahead, but should break even by 2027. If it does, Intel could reverse those losses in the future. Without a crystal ball, however, investors must consider whether they want to take the risk.
Intel is a bit of a contrarian investment, but it still looks like it has the potential to be a good long-term investment. It may not recover this year, but for investors willing to take some risks, it may be a good buy-and-hold option.
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Source: Yahoo Finance, CNBC.