Is It Time to Buy the Dow Jones' 3 Worst-Performing Stocks This Year?

The stock market has had a strong year in 2023, but not every stock has been a winner. In fact, some of the most well-known companies in the United States have seen their shares decline this year.

Here are the three worst performing stocks on the benchmark Dow Jones Industrial Average in 2023 (through late December), why each has performed so poorly, and whether it might be a good time to buy them now.

The 3 worst performing Dow Jones stocks of 2023

Data source: YCharts. Performance as of Dec. 26, 2023. Parentheses indicate negative numbers. YTD = year-to-date.

For comparison, the Dow Jones Industrial Average has delivered a 15.3% total return for 2023 through Dec. 26. However, the S&P 500, which is widely considered to be a better gauge of overall U.S. stock-market performance, has produced a total return of about 26% for the year. So, while even the worst performer in the Dow might not seem like it had a terrible year (especially when compared with many stocks' 2022 performance), these stocks were significant underperformers in an overall very good year for the market.

Why did these stocks perform so poorly?

To be sure, a lot of the underperformance can be attributed to factors that aren't company specific. For example, the energy sector itself was one of the worst performing parts of the stock market, and oil prices were down by about 5% for the year, which fueled Chevron's underperformance.

Plus, value stocks (which all three of these are) generally underperformed growth stocks in 2023, as the latter rebounded sharply from a rough 2022 and fueled the S&P 500's strong gains. In fact, the Vanguard Growth ETF (VUG 1.82%) delivered a 47% total return for investors in 2023. The Vanguard Value ETF (VTV -0.06%) only managed about 9%.

Having said that, there are some company-specific reasons investors should be aware of before buying these stocks "at a discount."

Walgreens, for example, has been pursuing some ambitious growth initiatives that have cost the company profitability. It has generated negative free cash flow in two of the past four quarters, and its future path is unclear at this point. Sure, Walgreens pays a 7.2% dividend yield, but how long can it keep this up, invest billions into developing new healthcare businesses, and struggle to turn a profit?

As previously mentioned, Chevron is mainly down because of falling energy prices. However, it is in the middle of acquiring Hess Corporation (NYSE: HES) in an all-stock deal, and there are some political uncertainties surrounding the deal that investors should keep an eye on. Although the stock has fallen this year, it's worth noting that Chevron started 2023 near its all-time high.

Johnson & Johnson has had a volatile 2023. The recent results have looked pretty solid in the wake of the spin-off of its consumer-products business as Kenvue (NYSE: KVUE), and its 3.1% dividend yield looks very safe. However, sales for certain key products declined, and Medicare price negotiations remain a big risk factor.

Are any of these a buy?

One very important takeaway is that these stocks aren't down for no reason. All of them have clear factors weighing on the stock price.

That said, I'd personally avoid Walgreens for the time being, at least until the company's cash flow gets back on track. However, Chevron is primarily beaten down because of lower energy prices, and Johnson & Johnson appears to be an excellent business on sale due to some near-term uncertainty. This could be an excellent time for patient long-term investors to take a closer look.