Why Regeneron Pharmaceuticals, Inc., Fastenal Company, and Xilinx Inc. Are Today’s 3 Worst Stocks

Record highs for the stock market today don't help these three names, which ended on Wall Street's bad side Tuesday

May 13, 2014 at 7:22PM

The stock market hit fresh highs today, as the S&P 500 Index (SNPINDEX:^GSPC) finished at an all-time closing record for the third-straight day. Although investors were mostly bullish on Tuesday, the telecom and consumer services sectors ended as notable laggards. So did shares of Regeneron Pharmaceuticals, (NASDAQ:REGN), Fastenal Company (NASDAQ:FAST), and Xilinx (NASDAQ:XLNX), which underperformed significantly today. The S&P, for its part, eked out a 0.8-point advance, closing at 1,897. 

Regeneron Pharmaceuticals lost 2.7% today, as the biotech stock continued to slide in the wake of its recent first-quarter report. I can understand why Regeneron shareholders might be a little confused with the market's reaction to the results, since the company beat both revenue and earnings expectations. The concern, however, is with U.S. sales of the company's popular macular degeneration product Eylea, which posted lower growth than expected. A secular shift out of the richly valued biotech industry is also working against shares.

Shares of Fastenal, which hawks industrial and construction supplies, shed 2.3% Tuesday. The company, which is primarily a wholesale operation, enjoys gross margins higher than 50%, is financially stable, and dishes out a 2.1% annual dividend. There isn't a compelling catalyst behind today's stumble, but a troubling longer-term trend can indeed be seen in the company's financials. Fastenal sales grew by 17.6% in 2010 and 21.9% in 2011, but revenue growth has been decelerating since then, growing by just 6.1% last year. 


Source: Xilinx website

Finally, Xilinx tumbled 2.2% on Tuesday, as shares of the chipmaker broke a four-day winning streak. Xilinx also pays a dividend, shelling out 2.5% a year, but it hasn't been quite as consistent as Fastenal in recent years. Sales in the 2014 fiscal year were nearly equivalent to those in 2011, and investors are rightfully concerned with the company's sustainable competitive advantage. Technology companies have to consistently invest in research and development to keep up with the competition, but it helps when those investments evidence themselves in the form of sales growth.

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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.

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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.

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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."

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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." 

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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.

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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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