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Will 2012's Losers Rebound in March?

Dan Caplinger
March 1, 2012

In a booming market, it's easy to find winning stocks. But even in the biggest bull markets, some stocks always lag behind. The question, then, inevitably becomes this: Are those stocks great values, or are they lagging for good reason?

Two months into the new year, short-term winners and losers have started sorting themselves out for 2012. So let's take a look at the five worst performers in the S&P 500 with an eye toward discovering what's behind their stock price declines -- and potentially unearthing some bargains in the process.

Apollo Group (Nasdaq: APOL  ) , down 20.8%
Apollo and its peers have been under fire for quite a while now. The government has been hostile toward the entire for-profit education industry in recent years, alleging a variety of questionable practices involving federally funded student loans and weak graduation rates.

Most of Apollo's plunge came just a couple of days ago, when it projected that new student enrollment rates would drop, reversing previous expectations for growth. For the stock's big drop to make sense, you have to believe that the current enrollment declines are just the tip of the iceberg -- and the beginning of a lasting trend that could eventually even threaten the industry's survival.

Electronic Arts (Nasdaq: EA  ) , down 20.7%
If you only look at earnings releases, it may seem strange to see Electronic Arts on this list. The company beat analyst expectations for both sales and earnings in early February. With franchises like Mass Effect 3, Star Wars: The New Republic, and Madden NFL, EA has plenty of good content.

What EA needs to do, however, is convince investors that social gaming isn't a threat to its more console-centered model. The popularity of Zynga has convinced many that lower-margin online games will eventually price EA and its peers out of the business. Yet despite recent weakness in the gaming industry, gamers will always reward good content -- and as long as EA delivers, it's likely to find ways to turn around its recent losses.

SUPERVALU (NYSE: SVU  ) , down 18.5%
Grocery store chain SUPERVALU's problems have been around for a while. In January, the company announced a wider net loss due to rising food costs and intense competition, even as the company had planned to try to expand. Now, SUPERVALU has scaled back its planned Save-A-Lot chain expansion.

Yet for value investors, the long-term story remains the same. SUPERVALU is slowly but surely cutting its debt, and even with the weak margins throughout the grocery business, SUPERVALU trades at multiples that are just half of what competitors Kroger and Safeway sport.