Why Garmin Ltd., Kraft Foods Group, Inc., and Coach, Inc. Are Today’s 3 Worst Stocks

All three of today's laggards boast hefty dividends, but dividends alone weren't winning over investors today

Jul 9, 2014 at 7:37PM

The stock market reversed a two-day slide on Wednesday after minutes from the Federal Reserve's June policy meeting were released, reassuring investors that interest rates will remain low for some time. Following a stellar jobs report last week, Wall Street was fearful that the U.S. central bank might start raising rates sooner than previously expected. Although markets were generally bullish today, shares of Garmin (NASDAQ:GRMN), Kraft Foods (NASDAQ:KRFT), and Coach (NYSE:COH) finished deeply in the red on Wednesday, even as the S&P 500 Index (SNPINDEX:^GSPC) added 9 points, or 0.5%, to end at 1,972.

Garmin was by and large the S&P's worst performer today, shedding 4.6% after an analyst badmouthed the stock. Pacific Crest downgraded the stock to underperform from sector perform, citing stiff competition from the likes of GoPro and Apple products as the primary catalysts. From a consumer standpoint, Garmin's vulnerability here is old news, as sexier, sleeker, smaller products from stronger brands continue to win over the hearts of consumers. That said, Garmin's consumer-facing business isn't its focus, and its tools are still widely used in the automotive and aerospace industries.


Cool Whip is just one of the many fine brands under the Kraft umbrella. Image Source: Kraft Foods

Kraft Foods, of course, has no industrial presence to speak of -- its strengths lie solely and squarely within the consumer market. Shares lost 1.6% on Wednesday, in what was mostly attributable to the stock going "ex-dividend" today. Kraft Foods doles out its hefty 3.5% annual dividend in quarterly payments, which are given to every shareholder who holds the stock at the end of a given date. The day after that is considered the "ex-dividend" date, which exposes the stock to negative pressure as short-term investors sell shares but still ensure their next quarterly dividend payment.

Lastly, shares of the struggling luxury fashion retailer Coach fell 1.4% on Wednesday. Wall Street seemingly loathes this stock more and more by the day, and today's downgrade from Buckingham Research was no exception. Just as rival Michael Kors is heating up, Coach's business is stagnating, and the company said last month that it would be closing about 70 stores in North America alone as it attempts to become a leaner, more profitable outfit. That'll be tough to do with same-store sales plunging by double-digit percentages and Coach's brand strength in a time of crisis. Until Coach starts turning things around, it's difficult to justify a reason to believe in this company in either the long or short term.

Top dividend stocks for the next decade
While Garmin and Kraft may not be the highest-growth names in the markets, they both dish out nice dividends. The smartest investors know that the right dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

John Divine owns shares of Apple and Michael Kors Holdings. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends and owns shares of Apple, Coach, and Michael Kors Holdings. Try any of our Foolish newsletter services free for 30 days. 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.

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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