Since March 2009, the S&P 500 (SNPINDEX:^GSPC) has recovered strongly from the major losses it suffered during the worst of the financial crisis. With the index up more than 150%, there's little excuse for any of its components to have lost ground. Yet among current S&P 500 members that have had their shares trade since the bear-market lows in early 2009, six have failed to gain any ground and posted in some cases substantial losses in the past four-and-a-half years. With the help of figures from S&P Capital IQ, let's take a look at these six S&P 500 losers to see if you should stay away or bet on a turnaround.
2 big turnaround stories
Among the six stocks, two have actually posted big gains over the past year. First Solar (NASDAQ:FSLR) has made the biggest turnaround, almost doubling since October 2012. Yet even with those substantial gains, the stock has been a longer-term loser, falling almost 60% since early 2009. The reason for First Solar's struggles has largely been the rise of China's solar industry, which created so much overcapacity that it led to a price war that wiped out First Solar's once-huge cost advantages. Even as it has encouraged investors with its attempt to dominate the large-scale utility solar space, First Solar has largely missed out on the increasing growth of small-scale residential and commercial solar installation. In the near future, that could leave First Solar on the outside of the industry looking in at higher-growth competitors taking the spotlight.
Hewlett-Packard (NYSE: HPQ) is the other big rebounder, with gains of 46% over the past year helping to cut its losses since 2009 to just 10%. Despite disappointing investors with its fiscal third-quarter earnings report, HP is producing prodigious amounts of cash flow, and the company has worked hard to reduce debt and restructure toward higher-potential segments. HP's revenue has come under pressure lately, but that's been a largely industrywide phenomenon, plaguing many of its peers as well. HP appears to be taking the long-run approach, and that could serve it well in the years to come.
2 stocks getting grounded
The natural-resources sector has seen some tough times lately, and two stocks have suffered especially hard. Newmont Mining is a natural casualty of the plunge in gold prices, as the stock essentially represents a leveraged play on the price of gold and the resulting profits the miner can reap from its operations. Higher internal costs have only made the industry's problems worse, and having lost half its value over the past year to produce a 22% loss since March 2009, Newmont needs bullishness to return to the gold market in order to thrive.
Peabody Energy (NYSE:BTU) has faced similar problems from its vantage in the coal sector, with a 22% decline since this time last year leading to an 18% overall drop during the S&P 500's bull market. Low natural-gas prices in recent years have hurt the prospects for coal, especially domestically as utilities shift their electricity generation from coal-fired to gas-fired power plants. Export opportunities to Asia have given Peabody an advantage over its peers, though, as it has resources in Australia to provide shorter transport than U.S. companies with solely domestic production. Asia's appetite for coal is likely to continue, and Peabody is a natural way to take advantage of it.
2 other struggling S&P 500 stocks
Rounding out these six losing stocks are Exelon (NYSE:EXC) and J.C. Penney (NYSE:JCP). Nuclear-utility giant Exelon has largely struggled from the same trends as Peabody, falling 15% over the past year and 17% since March 2009. Low natural-gas prices have eliminated much of the cost advantage that nuclear power has traditionally enjoyed. Given the ongoing safety concerns surrounding nuclear power, it's likely that as long as the natural-gas boom continues to offer conversion opportunities at low prices, Exelon will face a tough slog in producing future growth.
As for J.C. Penney, its tough times have cut two-thirds of the value from its stock since October 2012, leading to an almost 40% decline during the S&P 500's bull market. Penney's turnaround has come with too many roadblocks along the way, with an about-face in strategy resulting in customer confusion and skepticism about the retailer's true intentions for shoppers in the future. With the recent announcement of a highly dilutive stock offering to raise cash, J.C. Penney isn't giving bullish shareholders much reason to celebrate.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Exelon. 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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