Today's 3 Worst Stocks in the S&P 500
Jan 7th 2014 7:51PM
Updated Jan 7th 2014 7:52PM
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The S&P 500 Index finally broke its nasty three-day tumble into the new year Tuesday, ending in the green as the U.S. November trade deficit narrowed and tech leaders began showing off their new wares at the Consumer Electronics Show in Las Vegas. The S&P ended with 11-point, or 0.6%, gains, finishing at 1,837, or just 0.6% off the all-time highs it set going into 2014.
Video-streaming service Netflix was, for a change, not a boon to the benchmark index, ending as the day's absolute worst performer. It's quite a role reversal for Netflix stock, which was the S&P's single largest gainer in 2013, rocketing 298% as it posted impressive subscriber growth. Netflix came into its own last year with critically acclaimed original series like House of Cards, and Orange Is the New Black. That said, shares were off 5.6% Tuesday, after Morgan Stanley downgraded the stock to an "underperform" rating, lamenting an onslaught of competition that threatens to slow subscriber growth and jack up the prices of acquiring new content.
Michael Kors , one of the newer kids on the block of luxury fashion apparel, is also one of the newest additions to the S&P 500 Index, which it joined less than two months ago. Alas, like Netflix, Michael Kors stock couldn't escape the wrath of a downgrade: shares tumbled 3.8% after a Citi analyst downgraded the stock to "neutral" from "buy," noting Kors' remarkable run-up had left the stock fairly priced. Unfortunately for Michael Kors enthusiasts, the downgrade only made the stock cheaper, not the handbags.
Lastly, shares of big-box electronics retailer Best Buy tumbled, shedding 2.6% today. Like Netflix, Best Buy posted a stellar 2013, ending as the third best performer in the 500-stock index on gains of 237%. Now of course, those sorts of gains can't be expected every year (or frankly, every decade), but outperformance becomes even harder when industry peers start moaning about how awful holiday sales were. The offending peer, the $350 million Indianapolis electronics store hhgregg, is the sort of company Best Buy could swallow whole if it were looking to eat healthy in the new year. Size aside, Wall Street fears the steep same-store sales slump experienced by hhgregg could be endemic to brick-and-mortar electronics retailers, which could make for an ugly sell-off at the end of February when Best Buy reports quarterly results.
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It wasn't the best of days for Michael Kors and Best Buy. That said, today's performance doesn't affect their long-term potential; to learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.
The article Today's 3 Worst Stocks in the S&P 500 originally appeared on Fool.com.Fool contributor John Divine owns shares of Michael Kors Holdings. You can follow him on Twitter, @divinebizkid , and on Motley Fool CAPS, @TMFDivine . The Motley Fool recommends Michael Kors Holdings and Netflix and owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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