It may not feel like it compared to the string of strong years investors have enjoyed prior to 2018, but it's been a decent year so far. At this writing on July 16, the S&P 500 (^GSPC 2.13%) has delivered total returns (including dividends paid) of 5.8%. If the market delivers similar total returns in the second half of the year, investors will enjoy a roughly average year, gaining around 10% in total returns. That's nothing to sniff at. 

But not every S&P 500 stock has done well. As a matter of fact, the five worst-performing stocks currently on the index have lost between 29% and 45% so far this year, even after adding in dividends.

Company (Symbol) YTD Stock Price Change  YTD Total Return (Loss)
Arconic Inc. (HWM 2.46%) (29.5%) (29.2%)
Goodyear Tire & Rubber Co. (GT -0.84%) (30.7%) (30%)
Unum Group (UNM 1.26%) (30.8%) (30.1%)
Dentsply Sirona Inc. (XRAY 1.72%)) (31.6%) (31.3%)
L Brands Inc. (BBWI 1.20%) (46.7%) (45.1%)

Price change and total return as of 2:40 p.m. EDT on July 16, 2018. YTD = year to date.

The big question for these five stocks is whether the big price drop this year represents an opportunity or a sign that these companies are best avoided. Let's take a closer look at what's happened. There might be opportunity, but there could be more risk ahead, too. 

No. 5: Arconic

Since the company's split from Alcoa in late 2017, Arconic's stock price has alternated between surging on optimism around the long-term prospects for the highly engineered components it manufactures for industries like aerospace and automotive and absolute doldrums when the business fails to perform to expectations. 

With more firm orders for aircraft on a global basis than ever before, Arconic should be doing incredibly well. Unfortunately, it's struggling to meet customer demand in volume and consistency. And that's a problem that's causing it to spend a lot of money -- and missed opportunity -- to correct. 

Man in suit looks down at a chart line that's crashed through the ground.

Image source: Getty Images.

Arconic's management has a lot of work ahead of it. And as much as I love the potential for the company to make a ton of money over the next decade or so, it will take time to get its act together and that's keeping me on the sidelines. Without a clear path to stronger profits going forward, I'm not willing to take on the risk of owning a middling business that fails to meet its potential. 

Investors got a big boost recently when rumors of a buyout emerged, and it's possible multiple bidders could push the stock price even higher. The downside is that if the company doesn't reach a deal to be acquired, the stock price could fall flat in the short term. Considering that risk and the uncertainty around management's turnaround efforts, I'd suggest keeping Arconic on a watchlist but not making a move just yet. 

No. 4: Goodyear

It's been anything but fun for the eponymous tire and rubber company's investors so far as it suffers through short-term weakness in its business, which has seen sales increase a paltry amount while earnings and cash flows have fallen.

GT Chart

GT data by YCharts.

That's pushed its stock price down over 38% over the past 12 months. On one hand, there's the position that Goodyear is dealing with short-term issues that make it wildly undervalued, trading for barely seven times full-year 2018 earnings estimates. 

On the other hand, Goodyear does face a very real risk of getting caught up in the brewing trade war between the United States and, well, the rest of the world. In short, Goodyear's stock price has been pummeled on two fronts: poor operating results from the current environment, and fearful investors selling on concerns that protectionist trade policies -- and the corresponding responses by affected countries -- would be bad for business. 

And while there is risk of this affecting its business in the near term, I like Goodyear's prospects to respond to a changing reality. It could take time and money to reorganize its supply chain, but Goodyear's geographical diversity and many decades experience navigating global markets, along with its powerful brand and scale, should make it a long-term winner. 

No. 3: Unum Group

The leader in disability insurance and one of the biggest life and long-term care insurers in the U.S. and U.K., Unum's year can pretty much be summed up with what happened on May 1, 2018, when the company reported its first-quarter results. On that single day, its share price fell 17%, and it's down over 20% since. 

The market's biggest fear for Unum Group seems to be concerns the company could have to take losses related to its long-term care -- or LTC -- insurance policies. In the first quarter, the company reported an interest-adjusted 96.6% loss ratio for its LTC policies, substantially higher than the year-over-year loss ratio of of 88.6% and well outside management's expectations for between 80% and 90%. 

Older woman walks and smiles with a caregiver.

Long-term care costs could weigh on Unum Group for years ahead. Image source: Getty Images.

Unum hasn't sold any new LTC policies since 2012, but the policy buyers who acquired LTC insurance have proven persistent in keeping their policies, with 95% of policyholders regularly renewing their coverage. While this is a smart move for the insured (long-term care is very expensive and not covered by medicare or health insurance), it is proving to be increasingly expensive for Unum to honor these policies. As time passes and these LTC policyholders age and start to require more long-term care, Unum's bottom line could start taking a progressively bigger hit, though rising interest rates should help offset this, providing better returns from its investment portfolio. 

Unum's long-term future probably isn't at risk, but its earnings will almost certainly be affected as LTC policy claims rise in the years to come. For that reason, I don't think I would qualify the sell-off as a buying opportunity. 

No. 2: Dentsply Sirona

It has been a steadily down year for dentistry equipment and supply maker Dentsply Sirona, driven by weak sales and downward revisions of full-year expectations by management. Revenue was up 6% in the first quarter, but that was entirely fueled by favorable currency exchange, not an increase in product sales. But this looks more like a short-term speed bump than a growing risk to the company's business. The world's middle class is expanding, and that should grow the pool of people who can afford dental care. As an established leader, Dentsply Sirona should profit from this trend. 

And today, it looks like a decent value, trading for its cheapest valuation in years.

XRAY PE Ratio (Forward) Chart

XRAY P/E Ratio (Forward) data by YCharts.

No. 1: L Brands

This isn't a good list to come in first place on, putting L Brands as the "biggest loser" in the S&P 500 so far this year. For the retailer behind Victoria's Secret, Pink, and Bath & Body Works, the sell-off is a product of mixed sales and earnings results, as online competition and slowing traffic in the malls where the bulk of its stores are located weigh on its prospects. When it last reported its results, sales were up 6%, while comps -- sales at stores open for more than one year -- increased 3%. On the surface these numbers don't look too bad, but they represent a deceleration from the prior quarter, when sales were up 10% and comps surged 5%. 

This deceleration is especially concerning, considering that its earnings and cash flows have declined, and management lowered guidance earlier this year. This is a big concern because of L Brands' dividend, which is at risk of being cut if its cash flows cannot increase.

LB Payout Ratio (TTM) Chart

LB Payout Ratio (TTM) data by YCharts.

Its payout ratio (percentage of GAAP earnings paid out in dividends) has fallen below 100%. But, unfortunately, its cash dividend payout ratio (dividends are paid from cash flows, not earnings, which can be noncash financial wizardry) has steadily increased and was well over 100% last quarter. 

On the surface, L Brands looks like a bargain, trading for less than 10 times earnings and yielding over 7%. But with earnings and cash flows declining, growth decelerating, and the dividend starting to cost more in cash than the company generates, L Brands looks more like a value trap right now.