Why Chesapeake Energy Corporation, Cliffs Natural Resources Inc., and NetApp, Inc. Are Today’s 3 Worst Stocks

From oil and gas to coal and iron ore, energy companies had a tough time on Wall Street Friday, as did one tech stock.

May 16, 2014 at 7:34PM

Stocks finished the week on a higher note Friday, as surprisingly strong real estate numbers brought out the bulls today. April housing starts soared, rallying more than 13% from March levels as developers got busy as the cold weather abated. Regardless of how busy developers were getting, investors in Chesapeake Energy Corporation (NYSE:CHK), Cliffs Natural Resources (NYSE:CLF), and NetApp (NASDAQ:NTAP) still headed for the exits. The three stocks ended as the worst performers in the entire S&P 500 Index (SNPINDEX:^GSPC) on Friday. The S&P, for its part, added seven points, or 0.4%, to end at 1,877 today.

Shares of Chesapeake Energy shed 4.7% in trading as the company announced a flurry of strategic sales and spinoffs intended to reduce its leverage and shore up its balance sheets. The company should raise more than $4 billion in 2014 from the moves, which will reduce debt by $3 billion. As a result of these divestments, the oil and natural gas company expects to see production hit by 2% this year, while also expecting its growth rate in 2015 to slow markedly.


Cliffs Natural Resources' mining operations. Source: Company website.

Coal and iron ore miner Cliffs Natural Resources lost 3.3% today, as the stock took a hit from an analyst downgrade. Wall Street research firm Macquarie downgraded shares from a neutral to an underperform rating, just days after Cliffs Natural reported its first-quarter results. The company's coal business is hemorrhaging money, extracting coal for an average of $119.41 a ton, only to sell it for $88.61 a ton to its customers. As any kid with a lemonade stand can tell you, this is a broken business model.

Downbeat analysts were also the bane of NetApp's existence today, as the stock tumbled 2.8%. The data storage and solutions company has seen its stock price target lowered at two consecutive Wall Street firms: Wednesday, Piper Jaffray cut its target from $52 to $40 a share; yesterday, Wunderlich trimmed its target price from $44 a share to $34 a share. Each analyst seems to think growth is stagnating at the company, an opinion shared by a Raymond James analyst on Monday, who downgraded the stock on its falling market share.

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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.

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