The stock market saw modest gains on Monday, with the Dow Jones Industrial Average adding about 0.2%. Investors were generally pleased to see further signs of progress on a potential U.S. trade deal with China, and past fears about potential economic headwinds in the U.S. seemed to give way to greater optimism about the economy's overall prospects. Yet some stocks weren't able to join the rally. Cronos Group (NASDAQ:CRON), Pearson (NYSE:PSO), and Dorman Products (NASDAQ:DORM) were among the worst performers. Here's why they did so poorly.
Cronos gives back some gains
Shares of Cronos Group fell almost 8% after a new look at the marijuana industry from a stock analyst company poured cold water on the most bullish outlooks for cannabis. Jefferies officially began covering the cannabis stock sector, but unlike some of its peers, its projections for global growth in marijuana weren't all that optimistic, calling for revenue only to triple in the next decade. Moreover, Jefferies called out Cronos as one of the two stocks it gave a rating of underperform, compared to five buy ratings and two hold ratings. Cronos is a controversial cannabis stock with strong arguments on both sides, but today, it gave up ground compared to its rivals.
Pearson takes a turn for the worse
Pearson saw its stock drop 5%, giving up most of its gains from last week. On Friday, the publisher said that revenue was down 1% on weakness in its U.S. higher education and K-12 offerings, but strong performance in other areas of the business was enough to overcome those headwinds. CEO John Fallon admitted that the company still has a lot to do, but he argued that "we made good progress last year" and built momentum for the future. Yet today, shareholders seemed to lose confidence, reversing Friday's gains. With so much uncertainty in the industry, Pearson will have to continue working hard in order to keep investors confident about the future.
Dorman drives lower
Finally, shares of Dorman Products sank more than 10%. The automotive aftermarket supplier said that revenue climbed 14% in the fourth quarter of 2018 compared to the year-earlier quarter, with adjusted net income rising 25% over the same period. Yet even though Dorman's guidance for 2019 included sales growth projections of 6% to 10% for 2019, in line with what most of those following the stock had been expecting, earnings guidance was notably weaker than the consensus forecast among investors. 2018 was a solid year for Dorman, but shareholders seem less certain that the auto parts maker can keep up the pace this year.