The S&P 500's Big Losers in 2012

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The S&P 500 (INDEX: ^GSPC  ) has seen plenty of volatility so far this year. As I detailed earlier today, the index earned huge gains early in the year, only to pull back extensively before ending with a return of about 8%.

Unfortunately, some stocks aren't able to keep up with a rising market and end up turning in poor performances. Let's look more closely at the worst-performing stocks in the S&P so far this year to find out what's wrong and what the companies are doing to try to engineer a rebound in the second half of the year.

Alpha Natural Resources (NYSE: ANR  ) -- down 57.4%
Natural-gas discoveries have transformed the energy industry, bringing success to exploration and production companies that have hit it rich from previously untapped oil and gas reserves. But the resulting rise in gas supply has made the coal industry a distinct loser, as heavy coal users like electric utilities shift their generation from coal-fired plants to use natural gas instead. In response, Alpha Natural has cut production to try to weather the storm.

A recent rise in gas prices may augur an eventual turnaround for Alpha Natural and its peers. But with China's economic prospects on the ropes, demand could continue to be weak for some time. The stock is definitely bargain-priced, but would-be buyers have to accept huge uncertainty in exchange for the prospect of rich rewards.

First Solar (Nasdaq: FSLR  ) -- down 55.4%
On a similar theme, solar-energy companies have also been a big victim of changing energy trends. First Solar long had a cost advantage with its thin-film solar modules, but their relatively low efficiency left the company vulnerable to competitors with more efficient solar solutions.

Some have proposed breaking up First Solar into pieces to take advantage of its huge pipeline of future projects. But the company's future really relies on Europe, where it has a huge presence and where cuts in subsidies pose the biggest threat. If First Solar can keep getting new business, then it might be able to ride out the inevitable shakeout in the industry and emerge as a future leader.

Electronic Arts (Nasdaq: EA  ) -- down 40%
The entire video-game industry is trying to figure out what its future will look like. As cheap social gaming becomes more popular, fewer gamers are willing to shell out big money for more elaborate games, and that has eaten in to profits for EA and its rivals.

One big disappointment for Electronic Arts has been its Star Wars: The Old Republic offering. The MMORPG was designed to be EA's answer to World of Warcraft and generate potential huge continuing revenue streams for the company, but drops in subscriber counts suggest that gamers aren't as interested in paying for high-intensity games when more casual options are readily available. Until EA can figure out how to adapt to the new competitive environment, it will continue to struggle.

J.C. Penney (NYSE: JCP  ) -- down 32.9%
Six months ago, optimism ran rampant for J.C. Penney, as CEO Ron Johnson had just joined the company. Investors were hopeful that he and then-President Michael Francis could engineer a turnaround for J.C. Penney in the same way they had succeeded at Target.

But now, harsh reality has hit home hard. J.C. Penney saw same-store sales drop nearly 19% in its most recent quarter. The company's attempt to shift from a heavy-discount model to an everyday-low-price concept hasn't resonated with shoppers, and broader trends that have hurt the entire retail sector certainly aren't helping. Hitting investor confidence even harder is that Francis recently left the company. Given how hard it is to predict when the retailer might get some relief in the form of better results, it's hard to see J.C. Penney as an obvious buy candidate now.

Build your own recovery
Big losses are hard to bounce back from, but long-term investors look for signs of stocks that can avoid the kind of problems that have plagued these companies. If you're looking for companies that will weather whatever economic and financial storms come their way, let me suggest reading the Fool's latest special report, which reveals three Dow stocks with strong dividend payouts and growth prospects. The report is absolutely free, so get your copy today.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter, @DanCaplinger. 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 Fool has a disclosure policy.

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5/27/2016 4:43 PM
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