Is It Time to Buy the S&P 500's 4 Worst-Performing Stocks of 2023?

After entering bear market territory in 2022, the S&P 500 (^GSPC -0.07%) has yet to regain the bull market designation. But this index of 500 of the largest companies listed on stock exchanges in the United States is trading up nearly 9% so far in 2023.

Unfortunately, the S&P 500's overall progress this year is not universal and several companies in the index are having a rough 2023. Four companies in the index are currently trading down over 45% year to date.

Data source: YCharts.

Sometimes, stock price drops can be due to no fault of the company and are just a byproduct of broader economic conditions. Other times, the drop is warranted. Let's look at the four stocks mentioned above to see if the price drops were justified and these stocks are best avoided or if they got caught up in circumstances and investors now have the chance to buy at a sizable discount.

1. KeyCorp

KeyCorp is the holding company for the country's 20th largest bank, KeyBank. It has just under $200 billion in assets. Many banks -- especially small and midsize -- have been having a rough time since a solvency crisis involving a few regional banks escalated to something more in March.

Luckily, KeyCorp's deposits remained intact and it's doing better than many of its competitors.

In the first quarter of 2023, KeyCorp revenue and net interest income were up year over year (1.1% and 8.4%, respectively) but were down considerably from the fourth quarter of 2022 (9.7% and 9.9%, respectively). Net interest income will likely be down this fiscal year, but the company was confident enough in its finances to go forward with a $0.205 per share quarterly dividend announcement.

Investors seem overly pessimistic about KeyCorp. It will have to weather this current storm of high interest rates in the near term, but the long-term outlook still looks good. Its 8.3% dividend yield should also help convince investors it's worth waiting out the ride.

2. Comerica

Comerica is a financial services company that deals with commercial banking, retail banking, and wealth management. It's one of the older financial institutions around, founded in 1849.

Before the banking crisis that unfolded in March, Comerica was already facing an uphill battle over concerns regarding its clients and an uncertain economy, with the company having close to $3 billion in unrealized losses as of Q1 2023. These losses are expected to continue for the next few quarters, unfortunately.

Commercial clients account for most of Comerica's loan book, which isn't good considering they're more susceptible to broader economic conditions and defaults. The near future isn't looking too bright for Comerica and its better to avoid it right now.

3. Zions Bancorp.

Zions Bancorp. is a regional bank holding company operating primarily in the western and southwestern U.S. It has subsidiaries like California Bank and Trust, Nevada State Bank, and Amegy Bank of Texas. Like most regional banks, there's a lot of uncertainty surrounding the company right now. 

Zions' retail deposits declined by $18 billion in the past year (a 22% drop), which is notable because "only" $8 billion of that drop came from this past quarter during the banking crisis. The company's deposits were high over the previous couple of years because of pandemic-related deposit increases, so the drop is mitigated somewhat but still noteworthy.

The company still relatively solid and now sports a dividend yield hovering around 6.7%. So investors who can wait out the current banking sector downturn might have an opportunity here.

4. Dish Network

Dish is a television and internet services provider in the U.S. and operates the direct-broadcast satellite provider Dish Network as well as over-the-top IPTV service Sling TV. It also offers a mobile wireless service called Dish Wireless.

Dish is having a tough time in the new entertainment and streaming landscape. It has to compete with cable TV providers and try to fit in somewhere with consumers who are turning more and more to streaming services and social media services for their entertainment.

Unfortunately, it hasn't been doing the best job. Dish is losing customers at rates that should worry investors. Add in the company's increasing debt during a time when interest rates are high, and the stock looks like a pass right now.

You're likely better off investing in the S&P 500

Investing in individual companies has many benefits, including the chance for bigger returns. It's easier for an individual stock to double in value relatively quickly than a broad index like the S&P 500. With individual companies, however, comes added risk. During downturns in the stock market, you can't guarantee that an individual company will make it through. You can all but guarantee that the S&P 500 will bounce back eventually. It's rebounded after every downturn since its inception, and nothing leads me to believe this will change.

With so much economic uncertainty right now, one way to prepare for whatever may happen is by being diversified. You don't want your stock portfolio at the mercy of too few sectors or businesses. Investing in the S&P 500 accomplishes this with a single investment.

By investing in an exchange-traded fund that mirrors the S&P 500, you're essentially investing in the broader U.S. economy. That can be a much safer bet than any of the above individual companies.