Deep Dive: As S&P 500 rises to a record, these laggards are expected to come roaring back

Deep Dive: As S&P 500 rises to a record, these laggards are expected to come roaring back

Advisors 28 Aug, 2018

The S&P 500 Index is back to its record-setting ways.

The benchmark for large-company U.S. stocks hit a closing record Friday and again Monday after tumbling 9% from Jan. 26 through Feb. 9. Since then, the index had been grinding higher in fits and starts.

There are still plenty of large-cap losers this year — and a majority of analysts predict some of them may make you a tidy profit over the next 12 months.

First we’ll list this year’s biggest stock losers, and then we’ll pare the list to those that are still favored by most Wall Street analysts.

The losers

Here are the 28 S&P 500 SPX, +0.77%  stocks that are down at least 20% in 2018 (including reinvested dividends):

Company Ticker Industry Total return - 2018 through Aug. 24 Change in EPS - most recent reported quarter from year-earlier quarter Change in sales - most recent reported quarter from year-earlier quarter L Brands Inc. LB, +0.07% Apparel/Footwear Retail -52% -25% 8% Dentsply Sirona Inc. XRAY, +0.05% Medical Specialties -41% 9% 5% Coty Inc. Class A COTY, +1.34% Household/Personal Care -39% -41% 3% Unum Group UNM, +1.83% Life/Health Insurance -34% 21% 2% Invesco Ltd. IVZ, +2.49% Investment Managers -32% 2% 7% Mohawk Industries Inc. MHK, +1.32% Home Furnishings -31% -25% 5% Cimarex Energy Co. XEC, +0.33% Oil & Gas Production -31% 45% 22% Brighthouse Financial Inc. BHF, +1.60% Life/Health Insurance -29% -197% -1% Symantec Corp. SYMC, +1.52% Software -29% -55% -2% Newell Brands Inc NWL, +3.00% Industrial Conglomerates -29% -41% -13% Affiliated Managers Group Inc. AMG, +0.43% Investment Managers -28% -3% 3% General Electric Co. GE, +2.16% Industrial Conglomerates -27% -47% 3% Incyte Corp. INCY, +3.25% Biotechnology -26% -500% 60% Goodyear Tire & Rubber Co. GT, +3.39% Automotive Aftermarket -26% 13% 4% Dish Network Corp. Class A DISH, +0.85% Cable/Satellite TV -26% 822% -5% American Airlines Group Inc. AAL, +1.80% Airlines -25% -25% 4% Nielsen Holdings PLC NLSN, +0.49% Advertising/Marketing Services -25% -46% 0% Albemarle Corp. ALB, +0.93% Chemicals: Specialty -24% 197% 16% Whirlpool Corp. WHR, +2.89% Electronics/Appliances -24% -477% -4% Freeport-McMoRan Inc. FCX, +1.80% Precious Metals -23% 235% 42% Philip Morris International Inc. PM, +0.72% Tobacco -23% 24% 12% IPG Photonics Corp. IPGP, +0.66% Electronic Equipment/Instruments -22% 16% 12% Kraft Heinz Co. KHC, +0.91% Food: Major Diversified -22% -34% 1% Tyson Foods Inc. Class A TSN, -0.44% Food: Meat/Fish/Dairy -21% 21% 2% Sealed Air Corp. SEE, +2.28% Containers/Packaging -20% 14% 8% Fortune Brands Home & Security Inc. FBHS, +0.98% Building Products -20% 0% 5% General Mills Inc. GIS, -0.24% Food: Major Diversified -20% -13% 2% Principal Financial Group Inc. PFG, +1.68% Life/Health Insurance -20% 49% 1% Source: FactSet

You can click on the tickers for more information about each company, including news, earnings, charts, price-to-earnings and other ratios and financials.

The earnings and sales numbers can’t always point to the reasons why many of these stocks have fallen so far this year. L Brands LB, +0.07% the worst performer in the S&P 500 in 2018, cut its earnings guidance Aug. 23 for the second time this year.

Also see: L Brands stock extends selloff to eight-year low after Morgan Stanley cuts rating

There are many reasons stocks in such a diverse group of industries have declined significantly this year. Newell Brands NWL, +3.00% Dentsply Sirona XRAY, +0.05% Coty COTY, +1.34% and Sealed Air SEE, +2.28%  are among S&P 500 companies with high percentages of sales outside the U.S., which is an important concern during times of currency-related turmoil in international markets.

The losers loved by analysts

Starting with the above group of 28 companies, we narrowed the list to 13 with majority “buy” or equivalent ratings from sell-side analysts polled by FactSet. Here they are, sorted by how much the analysts believe the stocks might rise over the next 12 months, based on consensus price targets:

Company  Ticker Share 'buy' ratings Share neutral ratings Share 'sell' ratings Closing price - Aug. 24 Consensus target Implied upside potential Cimarex Energy Co. XEC, +0.33% 61% 39% 0% $83.90 $121.78 45% Affiliated Managers Group Inc. AMG, +0.43% 82% 18% 0% $147.55 $194.00 31% IPG Photonics Corp. IPGP, +0.66% 78% 22% 0% $166.91 $219.25 31% American Airlines Group Inc. AAL, +1.80% 72% 28% 0% $38.82 $50.88 31% Albemarle Corp. ALB, +0.93% 73% 23% 4% $96.00 $124.77 30% Invesco Ltd. IVZ, +2.49% 56% 44% 0% $24.14 $30.90 28% Incyte Corp. INCY, +3.25% 74% 26% 0% $70.08 $85.56 22% Fortune Brands Home & Security Inc. FBHS, +0.98% 60% 35% 5% $54.29 $66.00 22% Mohawk Industries Inc. MHK, +1.32% 82% 18% 0% $190.41 $227.42 19% Philip Morris International Inc. PM, +0.72% 59% 36% 5% $79.69 $93.27 17% Kraft Heinz Co. KHC, +0.91% 61% 30% 9% $59.03 $68.85 17% Tyson Foods Inc. Class A TSN, -0.44% 56% 38% 6% $63.12 $70.27 11% Nielsen Holdings PLC NLSN, +0.49% 69% 31% 0% $26.47 $28.71 8% Source: FactSet

While one can never really predict that a downtrodden stock will come right back in only a year’s time, there’s no doubt that these stocks have the backing of analysts and associated brokers at their firms. So if you are looking for a bounce-back play and are interested in any of the names on this list, do your own research to form an opinion about how well a company might perform over the next five to 10 years.

Also see: REIT prices push higher despite the Federal Reserve’s interest-rate increases

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