The Dow Jones Industrial Average (^DJI 0.40%) has missed out on the broad-market rally this year as tech stocks have surged amid excitement around artificial intelligence and a rebound from last year's sharp sell-off.
After falling 3.5% in September, the blue chip index is now up just 1% year to date.
However, the best times to buy stocks tend to be when they are out of favor. Let's take a look at the three worst-performing Dow stocks in September to see if any of them offer attractive buying opportunities.
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1. Boeing (down 14.4%)
Boeing (BA 0.25%) has been plagued by a host of problems in recent years, including two crashes and fraud accusations related to its 737 MAX jet, delays in the production of the 787 Dreamliner, and ongoing market share losses to Airbus.
There was no singular cause for Boeing's double-digit sell-off in September, and as you can see from the chart below, the stock fell steadily over the course of the month.
Data by YCharts.
Comments from management at a conference early in the month showed the company is still struggling. CFO Brian West said Boeing was in the middle of a "lumpy" recovery.
He also said Boeing would come in at the low end of its 400 to 450 guidance range for 737 deliveries this year. Finally, West predicted slightly negative free cash flow for the third quarter and negative margins in commercial and defense.
As a manufacturer of commercial aircraft, Boeing has significant exposure to the economic cycle, and concerns that interest rates will stay higher for longer than expected seem to be weighing on the stock as well. Boeing is still trading below pre-pandemic levels, and the business may need a full-fledged recovery to overcome those early losses during the pandemic.
2. 3M (down 12.2%)
3M (MMM 0.46%) has also faced its share of challenges this year. The company settled multibillion-dollar lawsuits over its PFAS chemicals polluting the water supply and faulty earplugs it sold the military.
Meanwhile, the company has struggled in the current macro environment as sales have declined, and it's seen multiple rounds of layoffs.
There wasn't much news from the company last month. But the stock fell sharply on Sept. 13 after CFO Monish Patolawala said at an industry conference that slow growth could continue into 2024 with weakness in 3M's electronics and consumer segments.
The stock fell 5.7% on the news and continued to drift lower on macro pressure and the Fed's forecast to keep interest rates elevated.
Data by YCharts.
3M shares may be getting too cheap to ignore. They now offer a dividend yield of 6.4% and trade at a forward P/E of 10.5.
The settlements are a net positive for the company, though they will cost it roughly $16 billion over the next several years. And the challenges to the business seem more related to the macro climate than internal operations.
The spinoff of the healthcare division expected by the end of the year could also help spark a recovery in the stock.
3. Walgreen Boots Alliance (down 12.1%)
Walgreen Boots Alliance (WBA 0.57%) had already had a dismal year heading into September. The company's acquisition strategy has not yielded the expected results, and the core business has struggled as well with difficult comparisons due to the boom from COVID-19 vaccines and tests.
Much of the stock's drop came on the first day of the month when the company said CEO Roz Brewer would step down, and management dialed down its guidance again.
Data by YCharts.
In a press release, the company said Brewer would step down from the CEO position and from the board immediately but remain as an advisor while Walgreens searches for a replacement.
It also said it expects adjusted earnings per share to be at or near the low end of its previously stated range of $4.00 to $4.05.
At this point, the stock has fallen so far that it could finally be worth buying, especially as it offers a 9.2% dividend yield. Still, it could take time for the business to mount a turnaround and for its investments in primary care and urgent care clinics to pay off.
