Today’s 3 Worst Stocks in the S&P 500

Western Union, Whole Foods Market, and Cisco Systems all drag on the stock market today

Feb 13, 2014 at 7:23PM

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.

Wall Street was in an upbeat mood Thursday, as nearly seven in 10 stocks advanced, and all 10 market sectors posted gains. I don't see what investors were so happy about. Both major data points that came out today, jobless claims and retail sales, came in worse than even the most pessimistic Bloomberg estimates. Stocks have now erased nearly all of January's losses as the fear surrounding an emerging markets contagion begins to die down. The S&P 500 Index added 10 points Thursday, or 0.6%, to end at 1,829. 

Shares of high-end organic grocer Whole Foods Market (NASDAQ:WFM) shed 7.2% today. Not surprisingly, the sell-off stemmed from a disappointing quarterly report, as many drops of this magnitude often do. There wasn't much good news to go around, as profits advanced by just more than 8% -- growth that, if continued, hardly justifies the company's lofty earnings multiple of 35. Of course, Wall Street is always looking to the future, and Whole Foods Market disappointed there, too, giving revenue and earnings guidance that lagged prior company estimates. As more high-end grocers enter to compete directly with Whole Foods, the stock's days of uber-high growth may be a thing of the past. 

Of course, growth slowdowns come with the territory of being a larger company. Berkshire Hathaway's Warren Buffett, for instance, famously said that if he had $1 million to invest, he could generate 50% yearly returns. His holding company, now worth more than $280 billion, now considers a good year one that merely beats the broader stock market. Cisco Systems (NASDAQ:CSCO) is familiar with this concept; its days of the hypergrowth it experienced in the 1990s are well behind it. Cisco revealed that it expects revenue to actually decline by between 6% and 8% in the current quarter, news that sent the stock 2.5% lower in trading. 

Western Union (NYSE:WU) stock dipped 1.4% Thursday, putting an end to a four-day rally. Investing in this money-transfer service requires -- to put it mildly -- patience and a longer-term mind-set, though I'm not sure that Western Union's long-term outlook is even attractive. Sales were flat in the most recent quarter, as earnings declined. Thinking more broadly, I wonder if Western Union will continue to remain relevant 10, 20, or 30 years from now. As Internet access becomes a truly global standard, and competitors continue popping up in the payment-services market, I fear that mobile-oriented, forward-thinking tech rivals will turn the Western Union name into a synonym for antiquated payment solutions. In fact, I think those perceptions have already begun changing.

The Motley Fool's three stocks to own forever
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. John Divine owns shares of Berkshire Hathaway. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool recommends Berkshire Hathaway, Cisco Systems, Western Union, and Whole Foods Market. The Motley Fool owns shares of Berkshire Hathaway and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information