Today’s 3 Worst Stocks in the S&P 500

Cliffs Natural Resources, Cabot Oil & Gas, and the ADT Corporation plagued the benchmark index today

Feb 20, 2014 at 7:09PM

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 stock market bounced back from a lackluster performance yesterday, seizing on strong U.S. manufacturing numbers to justify its gains. Only last month, Wall Street found itself stricken with anxiety from China's surprisingly weak manufacturing output -- how quickly things can change in a matter of weeks! The S&P 500 Index (SNPINDEX:^GSPC) added 11 points, or 0.6%, to end at 1,839. All it needs is another 0.6% gain to reach all-time highs.

Cliffs Natural Resources (NYSE:CLF), on the other hand, isn't in much danger of eclipsing record levels. Shares shed 2.4%, the most in the entire S&P 500, as Morgan Stanley added insult to injury by not only reiterating an underweight rating on the stock, but lowering its price target from $12 to $10 a share. For perspective, Cliffs Natural Resources would have to fall more than 50% to reach those levels. Even though the coal and iron ore miner swung to a profit in its most recent quarter, pessimism is easy to come by, and the company is currently fighting back against an activist investor intent upon changing the structure of the entire company. 

Even though the materials sector gained more than any other in the stock market today, Cabot Oil & Gas (NYSE:COG) managed to join Cliffs at the bottom of the S&P Thursday, losing 2%. It's hard to understand the psychology behind a move like this, which came before Cabot's scheduled quarterly earnings release after hours today. Betting on whether earnings will overachieve or underachieve in any given quarter is like betting on black or red in roulette: unadvisable. Your best bet is to keep your money in your pocket -- Cabot Oil & Gas added more than 2% in after hours trading on Thursday after exceeding earnings and revenue expectations. 

The ADT Corporation (NYSE:ADT) continued its recent downtrend on Thursday, losing 1.9% in trading. Shares of the security company are off about 22% in the last month alone, losses mainly driven by ADT's weak quarterly report at the end of January. The business was only able to increase revenues by 3.7%, and earnings actually fell from the same quarter a year prior. The good news is that ADT pays a decent, sustainable 2.6% annual dividend, something you might expect from a profitable, low-growth company. However, ADT's balance sheets could use some work, as its debt-to-equity ratio sits around 1.4, and its current liabilities exceed its current assets.

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John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool has no position in any of the stocks mentioned. 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.

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