In late January, Sean Pugliese of Wicham Investment Counsel, decided to examine some stocks which you would not be happy to own, they lost value. Although most investors own some dogs or losers or poor performers, it is hoped your portfolio does not contain many of the names listed below. There is always a theory, last year’s dogs are this year’s stars. Before you buy, ask yourself why did the stock lose value and what has changed?
Mr. Pugliese used the following criteria:
Companies in the S&P 500 with a 52 week total return of negative 10% or worse.
Dividend yield is the projected annualized dividend divided by the share price. The list only has dividend paying companies on it.
Debt/equity is the total debt outstanding divided by shareholders equity. A lower number is preferred, in the case of the list below, all have enough equity to pay off their debts.
Price/Earnings or P/E is the share price divided by the projected earnings per share. The lower the number the better the value.
Earnings Momentum – the change in annualized earnings over the past quarter. A positive number means something is changing for the better as earnings are getting better, the opposite is true if negative.
Company Mkt Cap 52 Week Div Debt/ P/E Earns Recent
$ bil Tot Rn% Yield % Equity % Mo % share price
Macy’s 5.4 -38.2 8.7 73.8 7.2 -5.4 17.42
Occidental Pete 42.2 -28.2 6.7 48.4 40.7 -34.6 47.26
Gap Inc 6.7 -28.0 5.4 35.2 10.8 -7.0 17.92
DXC Technology 8.9 -27.9 2.4 65.0 5.2 -7.8 34.64
Mosaic Co 8.2 -25.3 0.9 43.6 18.2 -29.1 21.52
Kraft Heinz Co 38.6 -21.1 5.1 60.3 12.3 0.0 31.60
Cabot Oil & Gas 7.1 -20.8 2.3 58.7 14.7 2.1 17.34
Kohls Corp 7.3 -19.2 5.7 63.3 10.1 -4.5 46.72
Tapestry Inc 7.9 -16.1 4.7 45.6 10.3 -3.1 28.56
Concho Resources 17.8 -14.3 0.6 23.2 21.5 -21.5 88.44
Dupont De Nemours 45.3 -14.0 2.0 13.4 14.8 -15.1 61.14
Cimarex Energy 5.3 -13.6 1.5 44.7 9.3 -18.0 51.64
Walgreens Boots All 48.2 -11.0 3.4 71.6 9.2 -1.5 54.43
Linking to dividend paying stocks, all the above pay a dividend which means if you own some shares you can still own them for they are paying you a dividend. The questions is should you buy more share or as long as the business is still good – you are protected and they have a manageable debt it is possible to hold on. A couple of the above are in the energy industry, the good news is we have a glut, the bad news it is not going away soon – what is your view on oil prices? some of the above are in retail – Amazon has changed many notions about retail, but if you go into the stores you can see how the stores are trying to adapt and whether you want to find a exit strategy. We buy to increase our wealth, but when do you sell?
There are more questions than answers, till the next time – to raising questions.