Today's 3 Worst Stocks in the S&P 500

Whether their trade is manufacturing, technology, or retail, these businesses had trouble wooing investors Tuesday

Feb 4, 2014 at 7:11PM

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.

Anyone watching the stock market yesterday saw, proverbially speaking, what spectators see at a bullfight: lots of blood and ultimately the death of the aforementioned bull. Unlike bullfights, the majestic bull was given new life today, as investors decided yesterday's 2.3% sell-off was overblown. Two stocks advanced for every one that declined on Tuesday, and the S&P 500 Index (SNPINDEX:^GSPC) added 13 points, or 0.8%, to end at 1,755. 

While Wall Street reminded the matador not to forget his silly costume on the way out today, shareholders of the Irish manufacturing company Eaton (NYSE:ETN) still lost some blood, as shares shed 2.3% in trade. While Eaton actually beat quarterly earnings estimates, a cynical analysis of the results reveals the earnings strength was due exclusively to a one-time tax benefit. Margins and sales failed to impress, while earnings guidance for 2014 was also more conservative than desired. Today is just another example of the ancient nonsensical Wall Street adage, "if Eaton's beatin', ya needn't keep 'em," in play. 

Despite a mostly upbeat attitude in the markets today, shares of Seagate Technology (NASDAQ:STX) felt none of the love, and investors sold off to the tune of 2.2%. The tech sector was a major underperformer today, slumping 1.7%, so truthfully Seagate Technology's weakness on Tuesday isn't anything to lose sleep over. Data storage is an area that should continue to grow at a healthy pace for the near future, so the market for Seagate's product isn't going anywhere anytime soon. What investors should watch carefully is the company's market share, since there's a ton of competition in this space and success depends largely on R&D budgets, innovation, and customer retention.

What a seamless transition this is to the day's final notable S&P 500 laggard, Coach (NYSE:COH)! Shares of the high-end fashion retailer slumped 1.9% today, largely because customer retention is something Coach hasn't excelled at recently. In fact, bitter rival Michael Kors wowed Wall Street with a blowout quarter today – a quarter that reminded Coach investors just what they were missing. The same-store sales metric is one of retail's most watched numbers, because it compares apples to apples by measuring sales growth at stores that have been open at least 12 months. Coach was an abject failure in this department last quarter, while Michael Kors seems to be having no problem growing same-store sales healthily.

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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 Coach and Michael Kors Holdings and owns shares of Coach. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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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