The stock market is trading at record highs, and many investors have cashed in on the market's gains. But some companies haven't let their shareholders join the party, as they've not only missed out on the big bull rally but have seen their shares plunge precipitously.
Let's take a closer look at four stocks that have lost half their value so far this year and the reasons for their respective downfalls.
Atlantic Power (NYSE:AT) -- down 54%
Atlantic Power is a small utility that has gotten a lot bigger in recent years by making numerous acquisitions. Until last month, the company was a favorite among dividend investors, with monthly payouts that equated to a 10% yield for shareholders adding onto solid share performance from late 2009 through the third quarter of last year. But the cracks started appearing last November, when the utility missed quarterly estimates on earnings and sales.
At the beginning of March, the real plunge came for Atlantic Power, as it not only reported a much worse loss than in the previous year but also slashed its dividend by two-thirds. That sent the shares down 30% in a single week and left many dividend investors with far less reason to hold the stock. The lesson: Some lucrative dividends are simply unsustainable.
Cliffs Natural Resources (NYSE:CLF) -- down 53%
Cliffs Natural specializes in iron ore and metallurgical coal production. During better times, those key components for steelmaking were in high demand, allowing Cliffs to pay a high dividend and enjoy strong growth prospects. But in February, Cliffs shares lost a quarter of their value in a single day as Cliffs cut its quarterly dividend payout by more than 75%, citing extremely weak prices for both iron ore and coal. It also announced secondary share offerings -- never a pretty sight after a big share-price plunge.
Now, many analysts doubt whether iron ore prices will bounce back anytime soon. Meanwhile, Cliffs' operational challenges could continue to weigh on the company's financials going forward. With the company planning to idle an iron-pellet plant in Quebec by the end of this quarter, Cliffs doesn't seem to foresee better times in the immediate future.
Allied Nevada Gold (NYSEMKT:ANVGQ) -- down 52%
Unlike Cliffs and Atlantic Power, Allied Nevada has fallen fairly steadily during 2013. In mid-January, the precious-metals miner gave 2013 guidance for 225,000 to 250,000 ounces of gold and 1.5 million to 1.8 million silver ounces at its Hycroft mine, implying solid growth but still disappointing investors, who sent shares down 5% after the announcement. The company's full quarterly report in late February only added to the pessimism, as it increased its capital expenditure estimates.
In general, mining companies have faced high production costs and pressures from stalling gold and silver prices. Allied Nevada's 11% drop yesterday alone reflected further declines in precious metals. Until those prices reverse course, Allied Nevada will have trouble bouncing back.
Millennial Media (NYSE:MM) -- down 51%
Millennial Media's big drop came in February after it announced earnings that fell well short of expectations. The mobile advertising company said that its strategic decision to focus on large clients and leave smaller prospects unpursued led to sales shortfalls during the first quarter.
Mobile advertising's effectiveness still hasn't been proven, so investors should see Millennial Media's growing pains as a normal part of a cutting-edge business. If the company can stay on top of current trends and continue working hard to innovate in mobile, then Millennial has plenty of potential to keep growing.
Watch out for falling stocks
Even in bull markets, some stocks drop. Staying aware of potential pitfalls in your portfolio can save you from a lot of pain.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. 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.