Today’s 3 Worst Stocks in the S&P 500

Dogged late in the day by news that Russian troops had invaded a volatile southern region of Ukraine, the S&P 500 Index (SNPINDEX: ^GSPC  ) still managed to close at an all-time high. With the extent of the military aggression still unknown, the conflict could either have a negligible impact on U.S. financial markets next week, or morph into a geopolitical nightmare that sends stocks tumbling. Focusing, instead, on new data surrounding the health of the U.S. economy, investors sent stocks higher, and the S&P added five points, or 0.3%, to end at 1,859. 

GDP growth in the fourth quarter of 2013 was roughly in line with estimates, at 2.4%, and consumer sentiment -- considered a gauge of consumer spending activity, which accounts for two-thirds of the economy -- was slightly higher than expected. Beating expectations wasn't enough for Salesforce.com (NYSE: CRM  ) investors though, as shares of the cloud services stock shed 5.8% on Friday. The company, which offers products that help businesses manage and increase sales, clearly knows a thing or two about sales in its own right. Revenue jumped 37% in the most recent quarter, but with losses ballooning to $116 million in the period, shareholders got fed up, and Salesforce.com CFO Graham Smith took the opportunity to announce his departure from the company. 

Biopharmaceutical company Alexion Pharmaceuticals (NASDAQ: ALXN  ) also saw shares dip on Friday, as they slumped 3.9%. Although there was no obvious reason for today's fall, Alexion Pharmaceuticals stock is richly priced, trading at 100 times earnings, making it more vulnerable to whiplash-inducing pullbacks at the drop of a hat. Alexion shareholders, unlike Salesforce.com investors, can happily tolerate a loss -- they sent the stock rocketing 20% higher in late January after Alexion reported a $19 million loss in the fourth quarter. 

Lastly, shares of Jabil Circuit (NYSE: JBL  ) lost 3.4% Friday, the victim of a stock downgrade and an underperforming tech sector. Raymond James analysts downgraded the stock from outperform to market perform, which is a lengthy way of saying they don't think there's anything special about Jabil Circuit stock. For investors, it's important to understand that Wall Street often listens to its own analysts -- thus giving them the power to move stock prices; but this says nothing about the reliability of analyst predictions. So think for yourself, and don't buy or sell stocks on the advice of "experts," who aren't primarily incentivized for their accuracy.

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  • Report this Comment On March 02, 2014, at 1:19 PM, Decoy0527 wrote:

    The SalesForce story is very interesting. I shorted it at $34 and I am down about $5,000 even though it's losses keep getting bigger and bigger. Happy to see that there appears to be a few investors getting tired of the losses. Doubt that I will get to break even, but anywhere close would be a plus for me. Just don't see how this thing can be selling for $62 with those losses. The CEO seems a bit of a buffoon in presentations but it has worked for him so far.

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