Is it the Opportune Moment to Purchase Three of the S&P 500's Least Successful Stocks in 2024?
Is it the Opportune Moment to Purchase Three of the S&P 500's Least Successful Stocks in 2024?
The S&P 500 has reached new heights this year, providing substantial returns for numerous investors. However, there have also been numerous struggling investments. Many companies facing difficulties in growth and lacking immediate catalysts have witnessed significant declines in their share prices this year.
Among the S&P 500's underperformers in 2024 are Walgreens Boots Alliance (-65%), Moderna (-57%), and Intel (-52%). In the following text, I will analyze their performances, the reasons for their plummeting stock prices, and the likelihood of their recovery.
Walgreens Boots Alliance: A Troubled Investment
Three primary factors have contributed to pharmacy retailer Walgreens Boots Alliance's dismal performance this year. The company is grappling with an uncertain future, it has posted losses in three out of the last four quarters, and it reduced its dividend at the beginning of the year. There hasn't been much to be enthusiastic about, and this is reflected in its freefalling stock price.
As the worst-performing stock in the S&P 500, Walgreens might seem like an appealing contrarian choice for investors. However, for the stock to recover, new CEO Tim Wentworth must prove that the company has a viable path to profitability and long-term growth. Competition from players like Amazon offering same-day prescription delivery could further erode Walgreens' thin margins, while its clinic strategy hasn't generated the desired results and might be abandoned altogether.
Several risks and questions surround Walgreens today, making it a dubious investment choice. Wentworth's ability to provide a strategy to reversing these negative trends and convincing investors in the company's growth potential are essential for any stock recovery.
Moderna: An Uncertain Future
COVID vaccine developer Moderna has not only lost the gains it made during the pandemic but also returned to its early 2020 trading price. With the government no longer buying COVID vaccines in bulk, there's uncertainty about Moderna's revenue growth in the coming years. The company saw a 64% drop in sales to $6.8 billion last year.
Moderna has diversified its offerings and is now working on other drugs and vaccines. However, its most promising initiatives do not immediately instill confidence in investors. Its COVID updates and flu shots are in the works, but the company needs something with significant long-term potential to revitalize its business. Relying on COVID sales has not reaped rewards for Moderna.
Moderna's fortunes might change if the personalized cancer vaccine (mRNA-4157) it's developing in collaboration with Merck advisably gains approval. While in phase 3 trials, encouraging news regarding this trial could boost investor sentiment. However, cancer treatments have historically had high failure rates, so investors should not set their expectations too high.
For now, Moderna remains a risky proposition, as COVID sales could continue to decline, and the company has recorded operating losses for the past three quarters.
Intel: Challenging Times Ahead
Intel has lost more than half of its value this year as investors recognize the difficulties ahead for the company. Intel's revenue has fallen, and while building its foundry business presents a lucrative long-term growth opportunity, it has been scarcely profitable so far.
During the three-month period ending Sept. 28, Intel's foundry segment reported a $5.8 billion loss, a substantial increase from the $1.4 billion loss it reported in the previous quarter, and its sales also dropped by 8%.
For Intel to bounce back, it must demonstrate to investors that its foundry business can be profitable, and there's strong demand in the market. Currently, many investors have doubts about investing in chipmaking, and this uncertainty has contributed to Intel's poor stock performance this year.
The safest move for investors currently would be to hold back and observe the situation as this is another struggling business facing profitability challenges.
Despite Intel's plans to make its foundry business profitable, the segment has reported significant losses and declining sales recently, causing concern among investors. Investing in chipmaking at this time, given the market uncertainty, might not be the best financial decision.
As for finance and money matters, many investors are weighing the potential of investing in struggling companies like Walgreens Boots Alliance, Moderna, and Intel, with each company facing various challenges that need addressing to recover their share prices.