The Dow Jones Industrials (DJINDICES:^DJI) is primed to set a new record today, if the market can hold on to its current gains. But even with the overall market at or near its best levels of the past five years, some stocks have completely missed out on the good times and have instead given their investors heartbreak and substantial losses.
Let's find out which stocks have lagged behind the Dow since the last time the popular average set a new record high, back on Oct. 9, 2007.
Alcoa (NYSE:AA), down 77%
Back in 2007, Alcoa was still riding high on a wave of optimism about the construction and infrastructure industry. But when the bottom fell out of the commodities markets in mid-2008, Alcoa plunged with it, and the stock has never been the same since. Even as prices of other commodities have rebounded over the years, aluminum prices remain stubbornly low amid a glut of supply and rising levels of recycling activity, which are matched unfavorably with sluggish demand. The company has made some smart long-term strategic moves, but it needs an improving market to cash in on its efforts.
Bank of America (NYSE:BAC), down 76%
Everyone's familiar with the banks at the epicenter of the 2008 financial crisis, as the headlines continue to be filled with their exploits even five years later. In the end, the too-big-to-fail bank didn't fail, but its rescue came at a huge cost to shareholders, who endured substantial dilution due to the TARP bailouts from which the stock has only partially recovered. Even with the possibility of a higher dividend coming as soon as this month, B of A has a lot further to go before investors will be happy with its performance.
Hewlett-Packard (NYSE:HPQ), down 59%
In 2007, former HP CEO Mark Hurd was still in charge of the printer and computer giant, whose stock had benefited greatly from the post-tech-bust bounce. Although it suffered in the market meltdown, HP climbed back to set new all-decade share-price highs in early 2010. But when Hurd left amid a harassment scandal, HP's leadership crisis began in earnest. A short-lived stint by Leo Apotheker resulted in the ill-fated purchase of Autonomy.
As the core PC business has declined, current CEO Meg Whitman has had to push the company in new directions, and only recently have investors started to accept the credibility of HP's turnaround efforts. Despite a nice bounce in the stock, HP has only begun the hard work of a full recovery.
Cisco Systems (NASDAQ:CSCO), down 35%
Cisco wasn't even a member of the Dow in 2007, as the company was part of the 2009 shakeup that replaced Citigroup and General Motors. But since it set multiyear highs near the time the Dow set its last record, Cisco has struggled in its role as leader of the networking industry. Much of the trouble owed to the company's attempt to expand its reach into much more competitive areas like consumer electronics and commercial computer systems. These moves left Cisco unprepared to handle increased competition when rivals attacked its core networking business. Since then, Cisco has refocused its efforts while still trying to become more than a simple networking company, but tough economic conditions, especially among its government customers in the U.S. and Europe, have weighed on the stock.
Can these stocks bounce back?
Just because these stocks have lagged the Dow doesn't mean they're doomed forever. They simply show that no matter how well the Dow does, some companies will inevitably get left behind -- at least temporarily.
Fool contributor Dan Caplinger owns shares of Bank of America. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Cisco Systems. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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