A lot can happen in four years. Michael Phelps is apparently faster. Misty May-Treanor and Kerri Walsh can still bring it on the sandy volleyball court. But other athletes haven't been as fortunate.
The same can be said for some companies.
In honor of this month's Olympic Games in Beijing, I decided to take a look at some of the prolific stocks that have collapsed over the past four years. I went back to Aug. 13, 2004 -- the day of the opening ceremonies in Greece -- and checked on how many of the most widely held stocks at the time performed through this month's opening ceremony.
Despite the recent market weakness, stocks haven't been too bad of a bet between the Olympian events. The S&P 500 has actually inched 21.7% higher between the 2004 and 2008 opening ceremonies, and that's without the gradual flow of dividends trickling in.
So what are a few of the big name stocks that have not only failed to keep pace with the market, but have also posted overall declines in that time? Here are a few that really stood out in stinking up the place.
|
Company |
8/13/04 |
8/8/08 |
Change |
|---|---|---|---|
|
Starbucks (NASDAQ:SBUX) |
$21.59 |
$15.12 |
(30%) |
|
Home Depot (NYSE:HD) |
$33.14 |
$26.37 |
(20.4%) |
|
Yahoo! (NASDAQ:YHOO) |
$27.49 |
$19.90 |
(27.6%) |
|
Sirius XM Radio (NASDAQ:SIRI) |
$2.18 |
$1.32 |
(39.4%) |
|
Dell Computer (NASDAQ:DELL) |
$34.51 |
$25.00 |
(27.6%) |
* Starbucks is adjusted after a 2-for-1 stock split in 2005.
Disqualified after false starts
Where did these seemingly popular investments lead their shareholders astray? Every stock athlete has a unique story to tell.
The rise and fall of Starbucks is legendary by now. Aggressive expansion, a growing number of premium coffee alternatives, and ill-advised forays into aroma-crushing breakfast sandwiches and brand-diluting music find the company closing stores and dreaming up new ways to win back customers. Starbucks was once the quintessential growth stock, but it's hard to stay that way when earnings and comps are falling.
Home Depot had a good thing going when the housing boom was humming along. It was even widely believed that the hardware superstore chain could withstand a real estate hit, because folks would simply renovate their homes. The problem is that when home prices began to crater, the ability of homeowners to tap disintegrating equity in their homes to bankroll the remodeling projects dried up. Tighter lending practices simply made an already bad situation even worse. Leadership concerns also plagued the company, but former CEO Bob Nardelli also walked in when the stock was ridiculously pricey, with a very difficult set of circumstances looming around the corner.
Yahoo! wouldn't have made this list if it had signed off on the Microhoo deal earlier this year, but that rearview mirror is cracked now. The online portal simply failed in making the most of its time at the top. It yielded market share to Google (NASDAQ:GOOG), a company that went public during the 2004 Olympic Games. It fumbled a leadership transition at the top, hiring internally last year when a fresh outsider was necessary. The upside here is that Yahoo! is still profitable, still growing, and refreshingly rich in strategic investments in Asia. The market doesn't want to hear about that now, but it may help out between now and the 2012 Olympics -- if the Microhoo monster doesn't rear its head again.
Sirius has always been one of the most actively traded stocks, in part because of its low share price. Just a few weeks after the 2004 Olympics, shares of Sirius catapulted after it was announced that Howard Stern was bringing his popular morning radio show over to satellite radio. However, the magnetic appeal of Stern and the successful merger with XM haven't been enough to win over investors who see billions in accumulated deficits, pesky debt, and a rough road to profitability. I'm a fan of Sirius, but the value meal share price proves that I'm in the minority.
Dell is our fifth loser. The company can't blame its niche. Rival Hewlett-Packard (NYSE:HPQ) has actually seen its shares nearly triple between the opening ceremonies. However, HP's gains have come mostly in appreciation of its once depressed margin levels. Selling PCs and laptops is still a tricky industry these days if you don't have apple logos on your boxes, and Dell's competitors have gotten smarter. The company isn't taking the challenges lying down, but it's taking steps to matter again in Wall Street's eyes.
Next stop: 2012
Instead of dwelling on the negatives that befell these five Wall Street giants over the past four years, let's talk about what it will take to turn these companies around.
Which of these five stocks do you think will beat the other four -- in terms of market returns -- between now and the 2012 opening ceremonies in London? Chime in on the comment box at the bottom of this page, and I'll be back next week to discuss some of your thoughts.
And just so you don't think that I'm a glutton for punishment, come back tomorrow when I will get into some of the prolific companies that have generated great returns over the past four years.
Play on!
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