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The S&P 500's Worst Stocks in August

By Dan Caplinger - Sep 1, 2013 at 9:30AM

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Several S&P stocks posted much larger losses than the broader market.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

August's 3.1% loss for the S&P 500 (^GSPC -0.16%) certainly didn't leave investors satisfied with their portfolio performance, as fears of rising geopolitical tension and ongoing economic uncertainty weighed on investor confidence. Such concerns led to hundreds of components of the S&P 500 posting declines for the month.

Yet some stocks got hit a lot harder than the overall average. Let's look at the four worst performers in the S&P 500 during August to see what hints we can get from the most vulnerable companies in this shaky market environment.

Abercrombie & Fitch (ANF -0.22%) was the worst performer in the S&P during August, plunging 28.8%. About 20 percentage points of that decline came in a single day after the company reported its latest quarterly results. A huge same-store sales drop of 10% caused Abercrombie's net income to fall by a third, and the retailer doesn't see a reversal to those troubling trends anytime soon, giving current-quarter guidance that's less than half what investors were expecting.

First Solar (FSLR 2.75%) also lost more than a quarter of its value during the month, falling 25.4%. As with A&F, First Solar's earnings report early in the month was to blame for most of the decline. With a 46% drop in sales and 70% lower net income, First Solar also cut its full-year revenue and earnings guidance in a stark reversal from its more optimistic outlook from earlier in the year. The big question for the solar company is whether it will find itself stuck in the systems development business as more efficient rival module-makers pass it by.

Refiner Tesoro (ANDV) dropped 18.5%, starting off the month badly with a poor earnings report. Price spreads between Brent crude and U.S. West Texas Intermediate have fallen sharply this year, and that has reduced much of the cost advantage that Tesoro and some of its peers have had over other refiners that rely on more expensive global crude supplies. That showed up in the company's results, and even though it raised its dividend by 25% and beat expectations for net income, investors still apparently believe that the future looks dimmer for the refiner.

Finally, Staples (SPLS) declined 18.3%. Earnings again were the culprit here, as the office-supply store posted 2% lower sales and an income drop of 15% in its second quarter. Falling international sales of more than 8% showed just how sensitive the company is to global economic trends, and a guidance cut on operating earnings weighed on Staples' broader efforts to turn around the company with a new strategic vision.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool owns shares of Staples. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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Stocks Mentioned

S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,145.19 (-0.16%) $-6.75
Tesoro Corporation Stock Quote
Tesoro Corporation
First Solar, Inc. Stock Quote
First Solar, Inc.
$101.90 (2.75%) $2.73
Abercrombie & Fitch Co. Stock Quote
Abercrombie & Fitch Co.
$18.02 (-0.22%) $0.04
Staples, Inc. Stock Quote
Staples, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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